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^^2d SeTsfon" } COMMITTEE PEINT 









AUGUST 11, 19 

31-553 WASHINGTON : 1978 


CLEMENT J. ZABLOCKI, Wisconsin, Chairman 

L. H. FOUNTAIN, North Carolina 
CHARLES C. DIGGS, Jr., Michigan 
ROBERT N. C. NIX, Pennsylvania 
DONALD M. ERASER, Minnesota 
QUS YATRON, Pennsylvania 
LEO J. RYAN, California 
HELEN S. ME YNER, New Jersey 
DON BONKER, Washington 
GERRY E. STUDDS, Massachusetts 
WYCHE FOWLER, Jr., Georgia 

LARRY WINN, Jr., Kansas 
WILLIAM F. GOODLING, Pennsylvania 
SHIRLEY N. PETTIS, California 

John J. Brady, Jr., Chief of Staff 

Subcommittee on Asian and Pacific Affaibs 

LESTER L. WOLFF, New York, Chairman 
L. H. FOUNTAIN, North Carolina J. HERBERT BURKE, Florida 


HELEN S. ME YNER, New Jersey 

Edward J. Palmer, Subcommittee Staff Director 

Jon D. Holstine, Minority Staff Consultant 

Christopher D. W. Nelson, Subcommittee Staff Associate 

James J. Przystup, Subcommittee Staff Associate 

Arlene M. Atwater, Staff Assistant 



House of Representatives, 
Committee on International Relations, 

Washington, D.C., August 11, 1978, 
This study was prepared by the Congressional Research Service, 
Library of Congress, at the request of Hon. Lester L. Wolff, chairman 
of the Subcommittee on Asian and Pacific Affairs. 

The findings expressed are those of the Congressional Research 
Service and do not necessarily reflect the views of the members of the 
Committee on International Relations. 

Clement J. Zablocki, 
Chairman, Committee on International Relations, 

Digitized by the Internet Archive 
in 2013 


House of Representatives, 
Committee on International Relations, 
Subcommittee on Asian and Pacific Affairs, 

Washington, D.C., August 11, 1978. 

The following study, "The United States, India, and South Asia: 
Interests, Trends, and Issues for Congressional Concern," has been 
prepared by Dr. Richard P. Cronin, Foreiiin Affairs and National 
Defense Division, Congressional Research Service, in response to a 
request from the Subcommittee on Asian and Pacific Afiairs. 

Dr. Cronin's report served as a guide in planning the subcommittee's 
recent study mission to Asia and the Pacific, and is being published in 
conjunction with the release of the study mission's report: ''Prospects 
for Regional Stability in Asia and the Pacific." 

Dr. Cronin's study is the first broad review of the relationship of the 
United States with India and other countries of the South Asia region 
to have been conducted under congressional auspices in several years. 
The study takes into account a number of significant developments 
that have occurred in recent years, including the emergence of India 
as the dominant regional power, the restoration of democracy in India 
in March 1977, the subsequent changes in India's foreign and domestic 
policies, the recent crisis in Pakistan's political system, and develop- 
ments of potential importance to the United States in other countries 
of the region. 

The study highlights the key importance of India's new status as 
the clearly dominant regional power and its aspirations for major 
power status. It takes note of several other developments of potential 
importance to the United States, including recent improvements in 
India's economic situation (due in large measure to 3 years of good 
weather); its growing military self-sufficiency; an apparent lessening 
of India's military ties with the U.S.S.R. ; a more evenhanded attitude 
toward issues between the United States and the Soviet Union; and 
the potentially significant growth of Indo-Iranian economic ties. The 
report also addresses the important question of the nuclear policies of 
India and Pakistan, and the current issue of continued nuclear coop- 
eration between India and the United States. 

While primarily focused on India, the study also addresses issues 
concerning the uncertain political situation in Pakistan and the related 
deterioration of that country's economic situation, the issue of 
remaining U.S. military ties with Pakistan, and questions of U.S. 
development assistance and humanitarian food aid programs in all 
countries of the region. 

The study's findings include both positive and negative signs for 



the future of the region and for U.S. interests. On the positive side, 
there now appears to be a good opportunity for a significant lessening 
the emnity between India and Pakistan that has hindered the develop- 
ment of the region and has, in the past, facilitated the intrusion of 
outside powers into the region and at several points raised the specter 
of a wider armed conflict. The study also takes note of some recent 
positive signs for regional economic progress. On the other hand, the 
development programs in all countries of the region have serious 
problems, and the countries have not uniformly capitalized on the 
past 3 years of relatively good monsoons. The immediate danger of 
political fragmentation is present in Pakistan, with potentially serious 
consequences for the region as a whole, and enormous long-term prob- 
lems remain in all countries regarding food, nutrition, medical care, 
education, and other human needs. 

While the findings of Dr. Cronin's report are those of the author 
and do not necessarily reflect the views of the subcommittee or the 
study mission, the subcommittee believes that this study is a timely 
and thought-provoking assessment of U.S. policy toward India and 
South Asia, and wishes to express its appreciation to Dr. Cronin for 
his efforts. 

Lester L. Wolff, 
Chairman, Subcommittee on Asian and Pacific Affairs. 



Foreword in 

Letter of Transmittal ^ v 

Summary 1 

Introduction 6 

Significance of South Asia to the United States 9 

Perceptions of interests 9 

Strategic interests 11 

Economic interests 14 

Humanitarian interests 18 

Plausible Developments in South Asia That Could Adversely 

Affect U.S. Interests 21 

India- Pakistan conflict 21 

India-China conflict 23 

Crop failure in India, Pakistan, or Bangladesh 24 

Breakdown of the central government in any South Asian country. _ 26 

Proliferation of nuclear weapons capabilities in South Asia 28 

U.S. Policy Toward South Asia Since 1971 30 

Basic features 30 

U.S. relations with India 31 

U.S. relations with Pakistan 32 

The Future: Trends in the Region and Policy Options for the 

United States 34 

Likely trends in the midterm 34 

Economic development 34 

Military trends 36 

Nuclear trends 37 

Policy issues for the United States and schools of thought thereon 38 

Economic issues 38 

Security issues 39 

Nuclear issues 42 



The salient feature of the evohition of South Asia (hiring the past 
few years has been India's emergence as a significant economic and 
miUtary power as well as the dominant power in the subcontinent, and 
a related decline in India's previously close economic and military ties 
with the Soviet Union. Since the 1971 India-Pakistan war, India has 
steadily widened the always sizable gap between its power and re- 
sources and those of its subcontinental neighbors. During the past 
year this process has accelerated due to continuing favorable economic 
trends in India and the political breakdown and related economic 
deterioration of Pakistan. 

Considerable disagreement exists on the significance for the United 
States and implications of these changes in the South Asia regional 
system. India has always constituted an enigma for the United States, 
in large part because of the contrast between recognized achievements 
and capabilities, on the one hand, and seemingly insoluble problems — 
in Western terms — of poverty, backwardness, and inequality on the 
other. Moreover, due to the peripheral nature of the South Asia region 
to predominant U.S. policy concerns, India's recent achievements in 
consolidating its dominant position in the region, in expanding 
agricultural production and exports of manufactured goods, in 
reopening diplomatic ties with China, and in restoring a democratic 
political system are not automatically perceived as elevating India's 
relative importance to the United States. For similar reasons, recent 
developments in other South Asian countries have attracted only 
intermittent attention. 

The following study assesses U.S. interests in the South Asia region, 
current trends, and plausible developments of importance to the 
States. It identifies important policy choices for the United States 
concerning India and South Asia, broader issues relating to U.S. 
interests in the Indian Ocean area, and schools of thought on these 
issues. The study is based upon U.S. Government publications, 
including recent economic reports and congressional documents, 
newspapers, scholarly publications, and telephone inquiries and inter- 
views with U.S. oflBicials and foreign diplomatic representatives. 

Some of the more significant findings of the report and implica- 
tions for U.S. policy toward South Asia are summarized below: 

Kegioxal Trends 

(1) The most important development in the region has been India's 
emergence as a significant middle power with great power aspirations 
and its clear regional dominance. This phenomenon extends beyond 
the simple fact of Pakistan's bifurcation in 1971. It is based more 
broadly on India's relative political stability, its active and generally 


31-553—78 2 

astute foreign policy, and the continuing political and economic 
malaise in Pakistan and Bangladesh. 

(2) A potentially very significant development has been the emer- 
gence of growing ties between the countries of South Asia on the one 
hand, with their relatively large pools of scientists, technicians, and 
skilled workers, and important untapped resources; and the oil ex- 
porting countries of Southwest Asia on the other hand. This phenom- 
enon is most striking in the case of Indo-Iranian economic relations, 
which have burgeoned since the 1973 OPEC price increases, but it is 
also significant in respect to economic relations between Pakistan, 
Bangladesh, and Afghanistan and the oil-producing states of the 
Persian Gulf region. 

(3) The main threats to the stability and welfare of the region are 
lagging rural development and continuing political instability based on 
ethnic, linguistic, and other manifestations of regional diversity and 
imperfect national integration. These problems are most acute in the 
cases of Bangladesh, Pakistan, and Sri Lanka, but are also a basic 
factor in India as well. In descending order of relative severity, Sri 
Lanka, Bangladesh, Pakistan, and India remain food-deficit countries, 
with widespread dificiencies in nutrition and per capita caloric intake. 
Only India has been capable of accumulating significant stores of 
f oodgrains during the past 3 years of good to excellent weather, though 
even in that country 2 successive years of unfavorable monsoons could 
drastically reverse the current favorable position. 

U.S. Relations With the Subcontinent 

(1) Many observers perceived the March 1977 elections and the 
victory of the Janata Party as a gain for U.S. interests and a setback 
to the U.S.S.R.^ The end of the state of emergency and the demise of 
Mrs. Gandhi's government certainly brought about more harmonious 
relations between India and the United States. It is not clear that the 
change of government ushered in any fundamental change in India's 
economic policies or altered its basic external policy of ''nonaline- 
ment," although the inconsistency of close military ties with the 
U.S.S.R. seems to have been removed. The new government has 
eliminated the previous anti-U.S. tone from India's foreign policy and 
has indicated greater interest in broadening India's sources of foreign 
technology and military hardware. 

(2) In recent years, but especially since the March 1977 elections, 
India has entered into a closer dialog with the United States regarding 
international economic issues. India shares a number of interests with 
the more industrialized countries, and it has been meticulously busi- 
nesslike in honoring its international financial obligations. Notwith- 
standing its significant degree of industrialization, however, India 
continues to behave generally as a Third World state with regard to 
its economic relations with the industrialized West. 

(3) Potentially, India shares several U.S. Indian Ocean security 
interests, including the security of shipping lanes, free transit of war- 
ships, and depending on U.S. naval strategy in the region, a minimum 

» Secretary of Defense Brown, in his January 1978 annual report to the Congress, asserted that the 
U.S.S.R. had been "set back" in its relations with India; Department of Defense Annual Report, Fiscal 
Year 1979, p. 2. Thb change in Kovernmont in India and better Indian relations with Iran and Chniawere 
also seen as a disappointment to the U.S.S.R. by Donald 3. Zagoria, "The Soviet Quandary in Asia," 
Foreign Affairs, January iy78, pp. 306-323. 

Soviet naval presence.^ A considerable factor for India is that it per- 
ceived a military threat from the U.S. Navy during the 1971 Indo- 
Pakistan War, whereas it relied, of necessity, on the Soviet Union as 
the ultimate guarantor of its security against outside intervention. 
Both India and Iran, the most important military powers on the Indian 
Ocean littoral, see a growing role for their own navies as an integral 
part of the diminution of external naval influence implied in the ''zone 
of peace'* concept. 

(4) Good relations with India would probably be difficult if the 
United States chooses to maintain a substantial permanent naval 
force operating out of Diego Garcia. On the other hand, the current 
announced ambitions for the Diego Garcia facility — that is, com- 
munications site, fuel storage facilities and an airstrip — can probably 
be accommodated in a good U.S. -India relationship, so long as other 
aspects of U.S. relations with India are favorable. 

(5) Despite the general enhancement of Indo-U.S. relations most 
observors see continued good relations between the United States and 
other countries in the region as important. U.S. food aid to Bangladesh^ 
it is argued, helps forestall a food catastrophe and contributes to the 
stability of the country, thus deterring the development of a ''powder 
vacuum" and opportunities for adverturism on the part of other powers 
including India. The options of the United States with regard to 
Pakistan are currently limited by the continuing political crisis in that 
country, but the United States and Pakistan's neighbors in the Persian 
Gulf retain an interest in its independence and territorial integrity. 
Pakistan's sense of insecurity and weak institutional base, which arise 
out of its geographic position and internal ethnic tensions, pose one of 
the most difficult problems for U.S. policymakers. For the foreseeable 
future good relations with Sri Lanka would not appear to impinge on 
U.S. relations with any other country in the region. The U.S. relation- 
ship with the new leftist regime in Afghanistan remains unclear at this 

Issues for the United States in South Asia 

(1) The broadest issue for the United States in South Asia would 
appear to be that of the extent to which the United States should follow 
a ''laissez-faire" policy in regard to the resolution of intraregional 
disputes and encourage India's aspirations for regional leadership and 
major power status. Currently there is little evidence that India 
intends to abuse its regional dominance, and aside from the internal 
strife in Pakistan and uncertainties arising out of the leftist coup in 
Afghanistan, the prospects for peace in the region are probably better 
than any time in the last 30 years. Nevertheless, in view of the still 
operative mutual security pact with Pakistan and that country's 
close ties with China, any Indian pressure on Pakistan or interference 
in its internal affairs would raise awkward questions about U.S. policy. 

(2) The question of large-scale economic assistance to South Asia 
or elsewhere) remains an emotion-laden issue in the United States. 

* In general, the Janata Government has been more evenhanded and more softspoken in carrying out th© 
longstanding policy of opposing the presence of thf superpowers in the Indian Oci-an. The Janata External 
AfTairs Minister, Atal Bihari Vajpayee, recently found it necessary to defend the Government against charges 
in the Lok Sabha (lower House of the Indian Parliament) by a Congress Party Member that India had 
"tilted" in favor of the United States on the issut of the superpower proS( nee in the Indian Ocean. Mr. 
Vajpayee reiterated India's opposition to all foreign bases in the region and said that the Ethiopia-Somalia 
conflict should be settled bilaterally and without the use of force. He also said that whll« India continued 
to adhere to the policy of opposing all foreign bases in the Indian Ocean, including the U.Si facility at Diego 
Garcia, the objective of eliminating military bases could only be achieved by discussions between the United 
States and U.S.S.R. India Express (U.S. publication of the Young India Forum), Mar. 11, 1978, p. 1. 

The more ambitious aims of some developmental specialists would not 
appear to have much chance of public support. On the other hand, 
aside from the possible demand for emergency humanitarian aid in the 
future, most observers see the issue of bilateral external assistance as 
less crucial than development strategies in the aid-receiving nations. 
Moreover, the United States is now only one of several possible 
sources of external assistance, a situation unlike that prevaihng at the 
inception of the postwar aid programs. 

(3) A potential issue is that of arms sales to India. Recentty Inida 
has shown itself anxious to reduce its remaining dependency on the 
Soviet Union for military technology by diversifying its sources of 
supply. This includes indications that India may be interested in 
U.S. military technology and the purchase or license production of 
U.S. equipment. While the United States has an obvious interest in 
seeing India diversify its sources of foreign weapons and technology, 
American arms sales to India would run counter to past and cun-ent 
proclaimed policy regarding arms exports to the Third World and 
would exacerabate U.S. relations with Pakistan. 

(4) The nuclear issue may well prove to be the most significant source 
of friction between India (and Pakistan) and the United States. 
Despite some optimism expressed by administration spokesmen and 
a possible temporary accommodation on the question of U.S. fuel 
supplies for India's Tarapur atomic power station, certain funda- 
mental conflicts exist between U.S. nonproliferation objectives and 
India's policy regarding demands for international safeguards on its 
nuclear activities. These problems became more serious ^vith the 
passage of the Nuclear Non-Proliferation Act of 1978 which, among 
other things, requires the renegotiation of the existing agreement to 
supply fuel for the Tarapur power station. The renegotiation must 
seek the application of International Atomic Energy Agency (IAEA) 
supervision of all Indian facilities, including current '^unsafeguarded" 
facilities of indigenous construction, and controls on the reprocessing 
of spent reactor fuel and other safeguards. Prime Minister Desai has 
indicated that India considers these terms tantamount to signing the 
Xon-Proliferation Treaty, which India considers ^'discriminatory" so 
long as the weapons powers do not cease nuclear testing and reduce 
their own warhead stockpiles. 

Even if it forgoes the weapons option, as now seems a reasonable 
possibility, India has the capability to negate certain U.S. nonprolif- 
eration objectives. On the other hand, however, India's option to do 
without U.S. enriched uranium is limited by continuing problems m 
its nuclear programs; limited financial resources; and the insistence of 
other nuclear suppUers, including the U.S.S.R., that IAEA safeguards 
be enforced on nuclear materials and technology exported to Incha. 

The U.S. Congress recently let pass an opportunity to stop the ex- 
port of low-enriched uranium to India during the ''grace" period al- 
lowed under the Non-Prohferation Act for the renegotiation oi the 
existing Indo-United States nuclear cooperation agreement. The 
adverse foreign jiolicv and potential prohferation consequences ol a 
unilateral U.S. termination of cooperation apj^eared to weigh more 
heavily in the minds of many Members of Congress than the proliiera- 
tion risk of the shi])ment of uranium in question. However, both the 
short-term outlook for continuing fuel shii)ments during the 18-month 
''grace" period allowed for renegotiating U.S. nuclear cooperation 
agreements and the long-term outlook for continued Indo-United 
States nuclear cooperations remain uncertain. 


South Asia claimed an unusual amount of attention in the United 
States during the past year. The March 1977 elections in India, which 
brought about an abrupt denouement of the emergency and the end of 
30 years of Congress Party rule; the progressive breakdown of the 
political system in Pakistan; and the democratic but violence-marred 
change of government in Sri Lanka; all served to produce an ex- 
ceptional amount of interest in the subcontinent and, if only in- 
directly, to call attention to some fundamental changes that have 
occurred in the region since the 1971 India-Pakistan War. These 
changes have been of a magnitude sufficient to prompt a reappraisal 
of U.S. policy toward the subcontinent and toward India in particular. 
The President's January 1978 visit to India, as part of a wider program 
of meetings with heads of state and parliamentary leaders in key 
countries in the Middle East and Europe, was the most recent and 
perhaps most significant indication of a revaluation upward of India's 
importance to the United States.^ 

The salient feature of the evolution of the subcontinent during the 
last years has been India's emergence as a significant economic and 
military power as well as the dominant power in the subcontinent, and 
a related decline in India's previously close economic and military ties 
with the Soviet Union. Since the 1971 Indo-Pakistan war, India has 
steadily widened the always sizeable gap between its power and 
resources and those of its subcontinental neighbors. During the past 
year this process has accelerated due to continuing favorable economic 
trends in India and the political breakdown and related economic 
deterioration of Pakistan. 

Having finallj^ achieved the ascendancy that had long eluded it^ 
India sought a wider recognition of its new status, including treatment 
on the basis of equality b}^ the major powers.^ Soon after the 1971 war, 
India moved both to establish a more ' 'normal" relationship with the 
truncated State of Pakistan and to solidify its relationship with the 
new State of Bangladesh.^ Mrs. Gandhi's government continued to 
upgrade the country's military forces and its indigenous defense 
production capacity, while at the same time steering clear of any 
permanent alliance with the Soviet Union. In 1974 India attracted the 
attention of the major powers in a dramatic way through the under- 
ground explosion of a nuclear device. 

During the same period India attempted with some success to put 
its economic house in order. This effort was necessitated by the 

> While various interpretations have been given to the trip, including the desire to signify satisfaction with 
the restoration of democracy in India and the President's wish to meet personally with Piime Minister 
Desai to discuss important bilateral questions such as the nuclear nonproliferation issue, it is reasonable to 
also view the trip as indicative of an upward reevaluation of India's significance to the United States. 

2 This theme is articulated in detail in Baldev Raj Nayar, "Treat India Seriously Foreign," Policy, Spring 
1975. pp. 13.3-154. 

3 India provided large-scale economic assistance to Bangladesh and was for a period the largest foreign aid 
donor. Myron Weiner, "Critical Choices for India and America," in Donald C. HelLmann (ed.), Southern 
Asia: the'Politics of Poverty and Ptacv.. (Critical Choices for Americans, vol. 131. Lexington, Mass., D.C. 
Heath & Co., 1976, p. 54; U.S. Agencv for Inttrnational Development; Development Assistance Programs; 
Fiscal Year 1974 Presentation to the Congress; Program and Projected Data: Asia, p. 61. 



consequences of the disastrous drought of 1972-74 and the fourfold 

rise in the price of oil since 1973. 

Due to favorable weather, a related turnabout in its foreign trade 
position, new foreign aid receipts and a dramatic increase in remit- 
tances from Indians working abroad, India now has unprecedented 
foodgrain and hard currency reserves and other advantages that at 
least afford the hope of sustained economic progress. These recent 
favorable trends are in marked contrast with trends in neighboring 

As early as 1973 the United States cautiously conceded India's new 
role in the subcontinent.^ Both before and during the Indian Emer- 
gency of 1975-77, the United States and India were quietly working 
toward a more correct, if not warm, relationship, The remaining g:ulf 
narrowed perceptably with the March 1977 elections, which engendered 
new respect for the maturity of the Indian policy and strength of 
India's attachment of democratic forms and values. Prime Minister 
Morarji Desai's expressions of good will toward the United States 
were reciprocated by President Carter. 

More concrete steps toward better India-United States relations 
included the following: India's declared intention not to carry out 
additional nuclear explosions; action by the United States to release 
a delayed shipment of fuel for the Tarapur power reactors; the can- 
cellation of a pending sale of A-7 light attack aircraft to Pakistan; 
and trade talks held in late January 1978 pursuant to the Delhi dec- 
laration signed by Prime Minister Desai and President Carter. Cur- 
rently, India-United States relations are better than they have been for 
many years. However, as the recent visits to India by President Carter 
and congressional delegations and a reciprocal visit to the United 
States by Prime Minister Desai revealed, some very difficult issues 
remain, especially the issue of India-United States nuclear cooperation 
and U.S. nonproliferation objectives. 

A possible ambiguity in current U.S. policy toward South Asia 
is that the United States has not fully resolved its position regarding 
India's newly achieved hegemony in the region. In part, the United 
States has been able to avoid confronting this issue by the ostensibly 
interim nature of the martial law administration in Pakistan, and ac- 
companying uncertain state of affairs in that country, and by India's 
recent scrupulously nonthreatening conduct of its bilateral relations 
with its neighbors. The benign use of its power for regional leadership 
could strengthen regional stability and thus advance an important U.S. 
goal, whereas Indian interference in the affairs of its neighbors would 
raise awkward questions about U.S. policy. 

Congress has already influenced future India-United States relations 
in a significant — but yet unpredictable — way through passage of the 
Nuclear Non-Prolireration Act of 1978 (Public Law 95-242, March 10, 
1978). In efl'ect, the act invalidates the existing 30-year nuclear co- 
operation agreement with India and requires the renegotiation of the 
agreement on the basis of full-scoj)e safeguards. 

Largely as a consequence of this legislation Congress recently had 
60 (lays to consider a Presidential decision announced on April 27, 

* r'rtsident Nixon's May 1073 foroiRn policy addnss to tho Conpn ss included an afTirmalion that the 
United States was "preyjarod to treat India in accordance with its new stature and responsibility on the 
basis of reciprocity." Secretary of State Kissinper went further than this when, durinp an October 1074 
visit to New I^elhi, he declared that the "siz* and position of India pave it a special role of leadership in 
Fouth Asian and world alTairs." William J. Harnds, "United States Tolicy Toward South Asia: Shifting 
Perceptions and Policy Choices, racillc Community," vol. 8, No. 4 (July 1977), p. 47. 

1978, authorizing a license to export about 17,000 pounds of low- 
grade uranium to fuel India's U.S.-built Tarapur atomic power station. 
In a divided vote the Nuclear Regulatory Commission had been unable 
to make a finding on the proposed export. Under the terms of the 
law Congress could have overruled the President's decision by con- 
current resolution. That it chose not to act in this case does not rule 
out the possibility of intervention by Congress in the future.^ 

Other opportunities for Congress to influence U.S. policy toward 
South Asia will arise in the next few months. Congress is now con- 
sidering the fiscal year 1979 foreign assistance legislation, including 
continued development and food aid programs for all of the South 
Asian countries. Any legislation resulting from demands for revisions 
in U.S. trade laws could prove important to U.S. relations with the 
countries of South Asia. In dealing with the fiscal year 1979 defense 
spending legislation, Congress may ao:ain address the Diego Garcia 
issue and the naval posture of the United States in the Indian Ocean. 

Major issues facing the United States in respect to its South Asian 
policy include the following: 

Political issues 

(1) How, and to what extent, does the emergence of a regionally 
dominant India affect U.S. interests? 

(2) What are India's ambitions in the region and are they compatible 
with U.S. interests? 

(3) How do U.S. security concerns and the perceptions of U.S. 
security goals affect India's policies? 

(4) Should the U.S. attempt to contribute to the stability of the 
region and if so, how best can this be accomplished? 

(5) Can or should the United States attempt to shore up the territorial 
integrity and independence of Pakistan? 

Economic issues 

(1) How important is the region in terms of trade, investment, and 
access to raw materials? 

(2) How important is the region to the United States from the 
point of view of worldwide food supply and demand? 

(3) Should the United States involve itself in the economic develop- 
ment of South Asia and if so, what are the most appropriate strategies 
for the United States in each country? 

Military issues 

(1) What is the significance for the United States of India's emer- 
gence as an important regional military power and the growth of the 
Indian Navy? 

(2) To what extent do U.S. security interests in the Indian Ocean 
conflict with our political interests in the subcontinent? 

(3) What is the significance of India's remaining dependence on the 
Soviet Union for military equipment and how should the United 
States deal with any future Indian requests for arms or military 

(4) How relevant to current and future U.S. security interests 
are Pakistan's continued membership in CENTO and our still operable 
mutual defense pact? 

'This question is discussed in greater detail in the section beginning on p. 42. See also CRS Issue Brief 
by Warren Donnelly, "Nuclear Exports: Licensing of Fuel for India's Tarapur Power Plant" (IB 78043). 


Nuclear issues 

(1) How should the United States deal with the nuclear issues that 
have arisen in its relations with both India and Pakistan? 

(2) What will be the consequences for U.S. nonproliferation ob- 
jectives if India declines to meet new U.S. terms for nuclear coopera- 
tion and expands its indigenous capabilities for enrichment and reproc- 
essing to meet its nuclear fuel requirements, or uses plutonium as a 
commercial fuel in the absense of U.S. -supplied enriched uranium? 


The region now comprising the countries of India, Pakistan, 
Afghanistan, Nepal, Bhutan, Banghidesh, Sri Lanka (Ceylon), and 
the Maldives has long posed a dilemma for the Unite(l States. Not- 
withstanding the fact that the United States has provided more than 
$17 million in bilateral economic and military assistance to South 
Asia since the end of World War II and additional billions of dollars 
through contributions to international organizations, the ap])ropriate 
directions for U.S. foreign ])olicy have always been less clear than in 
other regions of the world. Differing perceptions of the ])roper goals of 
American foreign policy have been shaped by disagreements over the 
importance of the region to the United States, over the most likely 
future of the region, and over the relationship of South Asia to larger 
U.S. foreign policy objectives. 

Pekceptioxs of Interests 

The identification of U.S. interests in South Asia has always con- 
stituted the crux of the debate over U.S. policy. Historically, U.S. 
interests have been generally considered to be small compared to some 
other parts of the world, and U.S. policy has been subject to sharp 
fluctuations.^ In the view of one longtime American observer of India 
and U.S. South Asian policy, ^'U.S. policies toward India have been 
constructed from a combination of good intentions and humanitarian 
elements, mixed with strategic calculations plus technocratic or me- 
chanical approaches to economic growth, the whole edifice undergirded 
by upward of $10 billions in aid, usually arranged in ways favorable 
to private profits at home." ^ 

A wide variety of opinion exists on the issue of the future importance 
of South Asia to the United States. One school of thought holds that 
South Asia may not have much importance to the United States in a 
positive sense, but all manner of problems could develop that would 
seriously affect U.S. interests. This vievr is argued by Myron Weiner, a 
political scientist at MIT with long experience in South Asia, in a 
contribution to a series of studies published by the Commission on 
Critical Choices for Americans. While criticizing the past tendency on 
the part of the superpowers to take an excessively global view of 
regional issues in South Asia, he also challenged the "new American 
orthodoxy" that "South Asia is an area of low priority for the United 
States." ^ Weiner sees in the "new orthodoxy" a failure to understand 
India's potential nuisance value to the world and to U.S. interests. 
Among the various possibilities for mischief are the export of nuclear 

1 William J. Barnds, "United States Policy Toward South Asia: Shifting Perceptions and Policy 
Choices, Pacific Community," vol. 8, No. 4 (July 1977), pp. 646, 650. 

- Richard L. Park, "Coming to Grips with India, Asian Survey," vol. XVII, Xo. 12 (December 1977) 
pp. 1158-59. 

3 Myron Weiner, "Critical Choices for India and America," in Donald C. Hellman (ed.) "Southern Asia: 
The Politics of Poverty and Peace" (Critical Choices for Americans, vol. XIII) (Lexington, Mass., 1976), 
p. 65. 

31-553 — 78 3 



technology, the options of a country that may find itself weak economi- 
cally but relatively strong in military terms, the Indian undermining of 
Pakistan's stability (with widespread reverberations), food shortfalls 
that dislocate world markets, failure to meet large international debts, 
or internal political disintegration that would draw in neighboring 
countries in Southwest Asia and the great powers. 

A different view, which has supporters both within the U.S. Gov- 
ernment and in the academic and international development commu- 
nities is that positive U.S. interests in South Asia are growing. This 
view is often articulated b}^ those who feel that certain global issues 
such as economic interdependence, food, and North-South type eco- 
nomic issues are acquiring increased importance, and that the coun- 
tries of South Asia, with a large share of the world's poorest people, 
will acquire increasing importance. This view is argued by John P. 
Lewis, a Princeton University economist and former AID official in 
India, in the same Critical Choices volume cited above. Lew^s argues 
that global issues will not supplant more traditional national interests, 
but will enlarge the context of national interests and the approaches to 
dealing with transnational problems.^ 

Some career officials in the Department of State aroue along simi- 
lar lines, though with a more narrow focus on specific diplomatic 
issues. The argument is made, for instance, that India will be the 
dominant regional economic and military power, and that as a coun- 
try with one foot in the development world and one foot in the under- 
develoi)ed world, India is in a position to play a constructive role in 
international economic and ])olitical forums. This view was somewhat 
reinforced by the recent ])olitical changes in India and by recent 
diplomatic contacts between high-level U.S. and Indian officials. One 
imi)ortant point here is that in the characterization of India as a 
''bridge" country, American and Indian views of India's role coincide. 
Overall, the view of many Department of State officials is not neces- 
sarily that South Asia has become more im})ortant to the United 
States — in fact, it still seems to be a region of relatively low priority — 
but that the nature of its significance to the United States has changed. 

Stephen P. Cohen and Richard L. Park,^ in an unj)ublished paper 
entitled 'Tndia: Emergent Power?" see American involvement in 
South Asia in terms of ''interest clusters." U.S. interests, in their 
view, have been characterized by diversity, diffuseness, and a high 
degree of indirectness. As a consequence, different groups in the 
United States have had widely differing views of where America's 
interests lie. Essentially, Cohen and Park see U.S. interests as strate- 
gic, humanitarian, and more recently, nuclear. Strategic interests, in 
their view, have shifted from an earlier concern with the global balance 
to one of ])eripheral interest based on South Asia's ju'oximity to the 
Persian Gulf. Currently, U.S. interests would be threatened by a (lis- 
ruptive South Asian war or the acquisition of base rights in the region 
by a hostile power. In the longer term, they argue that the region's 
strategic interest to the United States "would ex])and were India to 
develop an interventionist capacity in the gulf, or enhance its ties 
with im|)ortant gulf states, or ])erhaps if India were to engage its Navy 

* John I'. I>('wis, "CJrowth and Eciuily in Two of tlic Poorest Couiilrips: India and Bangladesh," ibid., 
pj). 7!M:{K. 

5 I'rofesKor Cohen, of the University of Illinois, Urbana, haswrilten widely on tha Indian Army and inili- 
tary issues in South Asia: Professor T'ark, a1 the University of Michigan, lias for many years been a prominent 
authority on South Asian i)olitics and U.S. policy in Asia. 


in threatening: U.S.-U.S.8.R seapower strate^^ies in llio Indian Groan 
or the Pacific." « 

Strategic Interests 

Despite its important geogra])hic ])osition hnkiii^ the Middle East 
with Southeast Asia, and its ahnost i)eninsular intrusion into the 
Indian Ocean, the Indian subcontinent itself is not an area of ])riniary 
U.S. security interest. To the extent that South Asia is a theater of 
Sino-Soviet rivalry, however, developments in the region can affect 
the larger tripolar balance involving the United States and those 
countries. Moreover, the instability in the region which has pre- 
vailed since 1947 has made South Asia a potential arena of superpower 
conflict. The 1971 Indo-Pakistan war was only the most recent ex- 
ample of this perennial danger. 

India has made great strides in the past few j^ears in enhancing its 
military capabilities. Its army is the third largest in the world, its 
air and naval arms are increasingly sophisticated and highly capable. 
Moreover, much of the country's military hardware is produced 
locally, either under license or from indigenous designs.^ There are 
indications that India intends to acquire a ''blue water" navy and 
to play an important role on the Indian Ocean. ^ What this may mean 
for U.S. interests is unclear. Certainly it is not accurate to see India's 
military capabilit}^ as a surrogate for Soviet power. In the short term 
it is possible that Indian and Soviet interests in the region may 
coincide, but this is increasing!}^ doubtful for the long term. 


The U.S. security interest in the Indian Ocean area, as contrasted 
with the South Asian land mass, is primarily related to sea lines of 
communication on which our economy and those of Western Europe 
and Japan are heavily dependent. More than half of all the world's 
seaborne oil is carried on Indian Ocean routes. During 1975 the route 
around Madagascar (Malagasy Republic) and the Cape of Good Hope 
carried some 14 million barrels a day to Europe and the U.S. east 
coast, while the eastern route to Japan carried another 3.7 million 
barrels a day.^ These trade routes are illustrated in chart I. 

« Stephen P. Cohen and Richard L. Park, "India: Emergent Power?" (unpublished), pp. 57-59. 

^ India produces the MiG-21M under license at Hindustan Aeronautics Ltd. factories at Nasik, Koraput 
and Hyderabad, as well as the indigenous nF-24 "Marut" fighter-bomber and the "Ajeet" lightweight 
fighter (a modernized Hawker Siddeley Gnat). HAL also produces the French (Aeropatiale) "Aloutte" III 
in a combat version under license and an armed light helicopter of indigenous design. India builds a version 
of the British Vickers Main Battle Tank as the "Vijayanta" Main Battle Tank aud a wide range of lesser 
military equipment and weapons. The Indian Navy operates "Leander"-class frigates built at Mazagon 
Docks Lt., Bombay. David A. Brown, "India's Aircraft Industry Grows," Aviation Week and Space Tech- 
nology, January 17, 1977, p. 14. "India Goes it Alone," Far Eastern Economic Review, May 7, 197(1, p. 39, 
"Indian Force Modernization Plans," International Defense Review, 4/1976, p. 535, and Jane's Fighting 
Ships, 1976-77 ("Forward," p. 125.) 

8 See Raju G. C. Thomas, "The Indian Navy in the Seventies." Pacific Affairs, vol. 48, No. 4 (Winter 
1975-76), pp. 500-518. Factors cited by Thomas include a desire to be less vulnerable to pressure from ex- 
ternal powers (such as the threat from the U.S. Navy during the 1971 Indo-Pakistan war), the increasing 
capacity of Iran and Indone.sia to finance a naval buildup, and a "protective -economic rationale" related 
to India's expanding seaborne commerce and the development of ofTshore petroleum resources. See also 
Mohan Ram, "India Turning to West to Fill Gaps in Military," Christian Science Monitor, Dec. 15, 1977, 
p. 26. G. S. Bhargava, in a recent article in the Far Eastern Economic Review, noted that India's "present 
strategy perceives a deepsea defense role beyond the bounds of coastal defense." He also noted that "a case 
has been built up for an ocean-going navy, though the more grandiose idea of taking over the Indian Ocean is 
not heard much nowadays." Bhargava saw the main limitation on India's naval program as the financial 
one. "The scope for development," he wrote, "is immense but it cannot be anywhere near as fast or spec- 
tacular as that of Iran." G. S. Bhargava, "A Role for Regional Powers," FEER, Dec. 2, 1977, pp. 30-35. 

^ Annual Defense Department Report, fiscal year 1978; Report of Secretary of Defense Donald II. Rums- 
feld to the Congress on the fiscal year 1978 budget, fiscal year 1979 authorization and fiscal year 
1978-82 Defense programs. Washington: Jan. 17, 1977. 


Chart I 



13 t'i /7 J Lli 


'"^ fZsY^ *-vy^ MIDDLE EAST % 











Source: Annual Department of Defense Report, fiscal year 1978. 

In the short term, the U.S. security interest in the Indian Ocean 
region is not greatly related to our policy toward South Asia except to 
the extent that issues such as the superpower naval presence in the 
region or the U.S. facility at Diego Garcia affect bilateral relations 
with littoral states. Currently, this potential irritant has been defused 
by the ongoing U.S.-U.S.S.R. talks on limiting naval forces in the 
region. Over the long run, the buildup of the navies of India and 
Iran, and a possible regional naval rivalr}^, could aff'ect U.S. interests. ^° 

The United States has an interest in denying the use of coastal areas 
on the approaches to the Persian Gulf to a hostile power. Pakistan, 
with an important port at Karachi and a flanking position on the Gulf 
of Oman, possesses strategic importance from the point of view of 
access to the gulf and the free movement of shipping. From this 
perspective, the United States retains a security interest in the con- 
tinued territorial integrity and independence of Pakistan. 

The United States also has a potential strategic nuclear objective 
in the Indian Ocean region, that of deploying, when necessary or con- 
venient, ballistic missiles submarines targeted on the Soviet Union. 
This objective is seldom discussed by U.S. officials, and in fact the 
official public position of the U.S. Govei-nment is that the Navy does 
not regularl}^ operate SSBN's in the Indian Ocean. The official U.S. 
position would appear to be generally borne out by the range and 
ca])abilities of the Polaris-ty])c submarines (le])loye(l in the Pacific 
Ocean. Given the 2,5()0-nau{ical-mile ranuc of the Polaris A-3 missile 

'"While thi' possil)iIity of a fiilure Tiulo-Tranian naval rivalry is often discus'^od. oiincnt Iranian jwlicy 
seems 1o he to cncoiirafjt, India to [)lay a larger military role in Ihn region and to promote an Indian Ocean 
reRional economic, croupinp with India as a principal particifiant. Mohan Ram, "Shah of Iran Looks to 
India with Naval, Economic Aims," Christian Science Monitor, Feb. 7, 11)78, p. 1. 


and a normal 60-(Iay cruise, the Polaris su])inarinos, if (loployod into 
the Indian Ocean and the Arabian Sea, would l)e in vnu^^a oi" Soviet 
targets for a relatively small portion of their cruise period. 

Despite these practical limitations, there is a widespread belief that 
the United States uses the Indian Ocean for SSBN ])atrols. Based on 
unclassified Department of Defense testimony before the Senate Com- 
mittee on Armed Services in 1973 on the Trident submarine program 
and information gleaned from unofficial Navy-connected sources, some 
American critics of U.S. military strategy in the Indian Ocean have 
suggested that the Navy uses the area for SSBN ])atrols. Their evi- 
dence, how^ever, is ambiguous. Moreover, during the same series of 
hearings in 1974 in which the claims of a U.S. SSBN role in the region 
\vere made by public witnesses, the then Chief of Naval Operations, 
Adm. Elmo Zumwalt, denied that the Navy operated Polaris sub- 
marines in the Indian Ocean. ^^ 

The belief that the United States deploys ballistic missile sub- 
marines in the Indian Ocean is also held by officials, former officials, 
and knowledgeable private citizens in various Indian Ocean countries, 
A retired Indian NavA^ officer, Lt. Cmdr. Kevi Kaul, in a 1973 article 
in Naval Review, noted that ''it is generally accepted that the United 
States has for some years deployed Polaris submarines in the Indian 
Ocean, where it is easy to avoid surveillance." ^^ 

Whatever current U.S. SSBN deployment policy may be, the Indian 
Ocean ofl'ers a partial long-term hedge against a Soviet breakthrough 
in developing an antiballistic missile capability, in that the Soviets 
would have to defend against an additional aA^enue of attack. \Yith the 
inception of the Trident I missile system, which will be backfitted to 
later model Poseidon boats in addition to the new Trident boats, the; 
Soviet Union would become considerably more vulnerable to SSBN'% 
deployed in the Indian Ocean. ^^ 

A more mundane but nonetheless important militar}' interest in the 
Indian Ocean is that of access of U.S. warships to ports in littoral 
countries for routine resupply, maintenance, and shore leave. The 
three-ship Middle East Force, fonnerh' home-ported at Bahrain, other 
U.S. warships transiting the Indian Ocean, and elements of the 
7th Fleet on periodic operations in the Indian Ocean, all require access 

" See testimony of Rear Adm. Genf R. La Eooque, U.S. Navj^ (ret.), on Mar. 14, 1974. In support of his 
assertion that U.S. SSBN's sometimes use the Indian Ocean, Admiral La Rocque stated: "For example, 
the February 1974 issue of Seapowtr, the magazine of th> Xayy league, in discussing the U.S. communica- 
tions facility in Australia at North West Cape, stated that 'classified messages to Polaris/Poseidon sub- 
marines deployed in the Indian Ocean are sent from this station'." 

Admiral La Rocque also introduced a map into the record which was extracted from May 1973 testimony 
of the Trident submarine program coordinator before the Senate Anued Services Committee. The map, 
as interpreted by Admiral La Rocque, purports to show present worldwide patrol areas of the Polaris/ 
Poseidon submarines and future patrol areas of the Trident fleet ballistic missile system. According to 
Admiral La Rocque, the map oflers "unclassified official evidence of the presence of Polaris/Poseidon 
submarines in the Indian Ocean." In fact, however, a reading of the testimony cited by Admiral La Rocque 
suggests that the map was intended only to r^^-present potential or feasible operating areas based on the 
respective ranges of the Poseidon and Trident missiles. U.S. Congress. House. Committee on Foreign 
Affairs. "Proposed Expansion of U.S. Military FaciUties in the Indian Ocean": hearings before, the Sub- 
committee on the Near East and South Asia. Jt.3d Cong., 2d sess., Washington, U.S. Government Printing 
Office. 1974. p. 92; U.S. Congress. Senate. Committee on AiTned Services. Fiscal Year 1974 Authorization 
for Military Procurement, Research, and Development, Construction Authorization for the Safeguard 
ABM, and Active Duty and Selected Reserve Sirengths: Hearings on S. 1263, 93d Cong., 1st sess., Wash- 
ington, U.S. Government Prinling Oflice, 1973. Ft. .5, Rcearch rnd Development, pp. 3.58.S-S4. 

•2 Lt. Cmdr. Revi Kaul, Indian Navy (ret.). "The Indo-Pakistan War and the Changing Balance of 
Power in the Indian Ocean," Naval Review, 1973. Reprinted in U.S. Congress. House. Committee on 
Foreign AfTairs, Proposed Expansion of U.S. Military Facilities in the Indian Ocean, op. cit., pp. 1S9-208. 

'3 Dale R. Tahtinen, "Arms in the Indian Ocean: Interests and Challenges." Washington, D.C, Amer- 
ican Institute for Public Policy Research, 1977. p. 20. 


to friendly ports for routine bunkering and provisioning. In South 
Asia, the U.S. Navy presently calls onh' at ports in Pakistan and Sri 
Lanka. There would be no political problem in visiting Bangladesh, 
but such calls are not operationall}^ convenient. The Navy has not 
called at Indian ports since mid-1971, when India instituted a require- 
ment that naval vessels specify whether they are carr3dng nuclear 
weapons. In 1972, India modified this policy via a circular note simph^ 
requesting that host facilities in Indian ports not be sought for vessels 
carr3ing nuclear weapons.^* Since U.S. policy precluded the acknowl- 
edgement that nuclear weapons were or were not aboard U.S. vessels, 
the Navy ceased visiting Indian ports. ^^ 

Economic Interests 

regional resources 

The South Asian region is not as deficient in natural resources as it 
was assumed to be 10 3^ears ago. India possesses considerable deposits 
of high-grade iron ore, mica, bauxite, and other minerals, as w^ell as 
immense deposits of coal. India is an important producer of the fol- 
lowing essential materials that the U.S. imports: beiyl, chromite, iron 
ore, manganese ore, and thorium ore. India, Pakistan, and Bangladesh 
all appear to have promising petroleum and/or natural gas resources. 
The mineral resources of the subcontinent appear to suffice for local 
development needs and to facilitate profitable exchanges with other 
regions. ^^ Iron ore from India, for instance, has become sufficiently 
important to Iran's infant steel industry that the Iranian Government 
has provided $630 million in oil credits to finance the massive Kudre- 
mukh iron ore project.^^ The human resources of India and Pakistan — 
that is, the relative abundance of scientists, technicians, and skilled 
workers — have become very important to the development plans of 
the Persian Gulf states, 


Total U.S. trade with South Asia, which averaged about $2.7 billion 
in 1975 and 1976, is modest in comparison with many other regions. 
In general, trade with Pakistan, Bangladesh, and Sri Lanka has been 
relatively stagnant during the i)ast few years, while U.S. trade with 
India has been increasing. Whereas the total value of U.S. trade with 
all countries in the region (including Afghanistan and Nepal) increased 
from $2.1 billion in 1973 to $2.6 billion in 1976, total U.S. trade with 

" U S Coneress. ITouse. Committee on Foreign Affairs. "United States Interests in and Policies Toward 
SouthAsia"- hearings before the Subcommittee on the Near East and South Asia, Mar. 12. 15 20, and 2/, 
1973 Washington, U.S. Government Printing Oflice. 1973. (93d Cong.. 1st sess ) Statement of James 11. 
Ts'oyes, Deputy Assistant Secretary of Defense (International Security Affairs) for Near Eastern, African , 

^"s Ba?ed mi^teVcon with an official in'tliePolitico-Military Policy Division, Deputy Chief of Naval Oper- 
ations (Plans. Policy, and Operations). Department of the Navy, July 12..19'7 Tj„„.i„4,-«n. 

'9 P^or a fuller discus.sion of India's natural resources, see Lawrence A. \ let, "India s Second Revolution. 
The Dimension of Development" (Council on Foreign Relations: New York, 197<'.). Pp„-^^r<'*:„. ^ , 

17 The project, which is to become operational in 1980, will involve the extraction of 22.() million tons ol 
iron ore a year. The ore will be enriched to ('.(1.5 percent purity, shipped (K) miles by slurry pipeline to the 
port of Mangalore. reduced to concentmted cake, and exporJed to Iran. The entire output for the next M 
years is dedicated to the National Iranian Steel Industries Co. After repaying the oil credi s in iron ore 
exports, the contract will earn India a])out $2.c. billion in foreign exchange. K. C. Khanna. Kudremukli. 
Project of the Century," The Economic News Digest (issued by Indian Investment Center, Now \ork), 
vol. 4, No. 10, October 1977, pp. 1, 4. 


India increased from $960 million to $1.8 billion durinii: the same 
period. Due primarily to a recent shar[) drop in food [)urcliases from 
the United States by India, U.S. trade with South Asia declined to 
$2.3 billion in 1977.^« 

U.S. exports to South Asia, which amounted to about $2.1 billion in 
1975 and $1.7 billion in 1976, represented about 2 |)ercent of total 
U.S. exports. U.S. exports to the region totaled $1.3 billion in 1977. ^'^ 
About 30 ])ercent of U.S. exports to South Asia are food <;rains ex- 
ported under the Public Law 480 pro^j^ram. The United States also 
exports significant quantities of nonfood products such as machinery 
and transport equipment, chemicals, and fertilizers. 

The United States has a high percentage of all South Asian import 
markets, on the order of 20 to 25 percent of each country's imports. 
The potential for trade expansion is largely a function of development 
programs in South Asia. 

U.S. imports from South Asia totaled $901 million in 1976 and 
$986 million in 1977. Major items which the U.S. imports from the 
region include textiles and yarn, clothing, sugar, jute, and coffee, 
tea, and spices. ^'^ Trade with South Asia during 1974-77 is shown in 
table 1. Cereals exports to South Asia from the United States (whether 
subsidized sales, grants, or commercial transactions) are shown in 
parentheses for 1974-76. Complete data for 1977 are not yet available. 

[In millions of dollars] 

U.S. imports from— U.S. exports to — 















3 778.6 






















Country 1974 1975 1976 1977 1974 1975 1976 1977 

Afghanistan 3.9 7.9 11.5 15.4 9.6 

Cereal exports . 1 

Bangladesh 68.2 54.2 .63.7 58.5 238.2 

Cereal exports... 150.3 

India 561.1 548.6 710.2 783.9 759.8 

Cereal exports 410. 1 

Nepal 2.0 .8 2.4 3.7 1.8 

Cereal exports .3 

Pakistan 60.6 48.9 70.1 57.1 396.4 

Cereal exports... 85.9 

Sri Lanka 40.7 40.2 42.8 67.0 22.5 

Cereal exports 7.6 

Total 736.5 700.6 900.6 985.6 1,428.4 2,105.0 1,699.0 1,301.7 

1 "Highlights of U.S. Export and Import Trade." (FT-900/December 1974, 1975, 1976, 1977). Cereals exports are from 
category 04, "cereals and preparations of cereal, flour, etc.," FT-455/annual (1974, 1975, 1976). 

- Not available. 

3 The sharp decline in exports to India in 1977 reflects an almost complete cessation of food grain imports by the Govern- 
ment of India. 

Source: U.S. Department of Commerce. Bureau of Census. 

Trade between the United States and the entire Indian Ocean lit- 
toral is shown in table 2. 

'8 U.S. Department of Commerce. "Highlights of U.S. Export and Import Trade." FT 990/December 
1973-77. Tables E-3 and I-4A. 

i« U.S. Department of Commerce. "Highlights of U.S. Export and Import Trade." FT990/December 
1976-77, table E-3. The decline from 1975 to 1977 largely stems from a reduction in Indian and Bangladesh 
Imports of U.S. food grains. 

20 U.S. Department of Commerce. "U.S. General Imports: World Area by Commodity Groupings." 
FT 155/annual (1975, 197G, and 1977); "U.S. Exports: World Areaby Commodity Groupings." FT 455/annual 
(1975, 1976, and 1977). 

2, 335. 5 

1, 890. 

4, 225. 5 




9, 778. 8 

10, 842. 2 

20, 610. 


(6, 358. 5) 




2, 244. 8 





7, 244. 8 

12, 589. 1 




18, 769. 6 

20, 920. 8 

39, 690. 4 




10, 522. 1 

18, 622. 7 

29, 144. 8 


[In millions of dollars] 

Subregion Exports to Imports from value 


South Africa 2 

New East Asia 

Saudi Arabia (petroleum exporter) 2 

South Asia 


Southeast Asia Australia 

Indonesia (petroleum exporter)^ 

Total Indian Ocean littoral 

Western Europe _. 

Japan. _ 

1 Includes all countries touched by the Indian Ocean and subsidary bodiesof water including the Red Sea, Gulf of Aqaba,. 
Persian Gulf, Bay of Bengal, Andaman Sea, and Strait of MalaccE. Data does not include landlocked countries whose trade 
must pass through Indian Ocean ports but includes countries whose primary trade links are via other water bodies. 

2 Largest trade partner. 

Source of Data : U.S. Department of Commerce, "Highlights of U.S. Exports and I mport Trade." FT-990/December 1977 
(Issued February 1978). Imports are for transaction value at the port of exportation (FAS). 


The United States is India's best trading partner. As a result of a 
steady rise in Indian exports to the United States and the near cessa- 
tion of food-grain imports, India's trade deficit with the United States 
was ehminated in 1977.^^ India's two-way trade with the United States^ 
is about twice as large as India's trade with the U.S.S.R.^- 

Traditionally, India has been a large importer of U.S. wheat. Since 
1972, the vast majority of its food purchases from the United States 
have been commercial transactions, rather than concessional sales. 
Due to 3 good agricultural 3'ears, Indian foodgrain imports have all 
but ceased. 

Currently, the United States has the largest single share of Indian 
imports, about 20 percent. The current growth in India's industrial 
sector (about 5 to 7 percent in 1976-77) and somewhat liberalized 
import restrictions have produced an expanded market for U.S. 
capital goods and technology. 

India's determined exploitation of its mineral and petroleum re- 
sources has produced a good and growing market for U.S. equijmient 
and technology. The Oil and Natural Gas Commission (ONGC) of 
India estimates that about $500 million will be required to develop the 
Bomba}^ high offshore oilfield in the next few years, including pur- 
chases of subsea pipeline and drilling equii)ment. U.S. firms are already 
heavily involved in this project. ^^ The ONGC has set a target of 
200,000 barrels a day by 1981, which should satisfy about one-half of 
India's expected consumption.^* 

21 U.S. Departnipnt of Stato/Department of Commerce. "Foreign Economic Trends and Their Implies 
lions for tho United States: India." No. 77-072 (May 1977). 

2-' I ndo-Soviot trade totaled about $817 million in 1970 and $1,040 million in 1975. Tclocon with U.S. Central 
Intolligencc Apency, Nov. 2, 1977. 

23 Brown <t Root Co. of Houston, Tex., won a $75 million contract for pipclaying from one of India's 
ofT.shore fields. This is part of a $150 million World Hank financed project. India E.xprcss, Sept. 23, 1977, 
p. 3 (This is a U.S.-pubiishcd journal of the Youiir India Fonnn.) 

'< U.S. Departmenlof Slate/Department of Commerce. Foreign Economic Trends and Their Implications 
for the United States: India. No. 77-072 (May 1977). 


On the whole, U.S. direct investment is snuill — about $;')G() nnllion — 
but still constitutes one-fourth of India's total foreimi investment. In 
the past foreiii'n firms have been reluctant to invest in incha (hie to 
restrictive licensing regulations and requirements for joint-venture, 
high-technology, or export-oriented i)rojects.^'' The prospects for in- 
creased investment mainly depend on the attitude of the present 
government toward the o})erations of foreign businesses. ^] he current 
prosj)ect is for a significant rationalization of the licensing j)roce( hires 
for foreign investment but strict adherence to regulations requiring 
majority Indian control of most foreign business operations.-'' 


Pakistan represents a considerably smaller field for U.S. trade and 
investment. Moreover, the Pakistan market is highly dependent on 
external financing by Western and OPEC countries and international 
lendinii' institutions. Imports of U.S. goods totaled $372 million in 

1975, $394 million in 1976, and $293 nnllion in 1977. Exports to the 
United States amounted to only $49 million in 1975, $70 million in 

1976, and $57 million in 1977. U.S. equit}' investment in Pakistan 
totals about $70 million.^^ 

Pakistan has a heavy external debt and has essentially depended on 
foreign economic assistance to cover a trade deficit equal to the total 
value of its exports. The former Bhutto government played a leading- 
role among the Third World countries in demanding debt relief and 
more advantageous prices for commodity exports. ^^ Currently, how- 
ever, debt relief is only one of many urgent economic problems. The 
recent political turmoil has heightened the economic malaise by im- 
peding production and exports. ^^ 


While Bangladesh has not proven to be quite the ''international 
basket case" that was predicted, it faces serious economic and financial 
problems and is a long way from food self-sufficiency. Two good har- 
vests and a recent 11-percent economic grow^th rate have eliminated 
the immediate specter of widespread starvation. Food production is 
now up to pre-1971 levels, but the population has expanded at an 
estimated annual rate of 2.7 percent per year to a current total of 
about 85 million. 

Political uncertainties place a major drag on economic development. 
The basic factors in the present improved economic situation are 3 
years of good weather and massive foreign assistance. Bangladesh's 
imports and exports are even further out of balance than Pakistan's, 
with imports (primarih^ food) exceeding exports b}' a factor of 3. 
The trade imbalance has been paid for by $4 billion in external assist- 
ance since 1971 and short-term loans from the International ^Monetary 

25 Ibid. 

26 Jayanta Sarkar. "IBM To Close Shop in India," Far Eastern Economic Review, Dec. 9, 1977, pp. 
48-49. , "India's Takeover Race," FEER, Mar. 31, 1978, p. 47. 

-~ U.S. Department of State/Department of Commerce. Foreign Economic Trends and Their Imflications 
for the United States: Pakistan. No. 76-128 (November 1976). Depaitment of Commerce. Highlights of 
U.S. Export and Import Trade. FT £90'December 197(1 (issued February 1977). 

« Ibid. 

2-' Despite favorable weather the agricultural sector grew only about 2.2 percent in 1977. This included a 
record wheat crop but a fall in cotton production of one-third from normal levels. Financially, Pakistan 
faces increasingly serious debt service problems and large budget and foods deficits. The one favorable trend 
is a rapid growth in remittances from Pakistanis working overseas, which are expected to grow to $1 billion 
in 1978: Statement by the Deputy Assistant Secretary for Near East and South Asia, Adolph Dubs, before 
the Asian and Pacific Affairs Subcommittee, House International Relations Committee, Mar. 16, 1978. 

.31-553 — 78 i 


Fund. U.S. assistance alone has amounted to more than $1 bilhon 
since 1971. 

The United States is a much more important factor in independent 
Banghidesh's economy than when the country was part of Pakistan 
(1947-71). U.S. exports of $382 million in 1975 and $117 million in 
1976 (primarily food) amounted to about 30 percent of all Bangladesh 
imports. U.S. exports to Bangladesh totaled $156 million in 1977.^° 

U.S. inyestment in Bangladesh is negligible, and there now seems 
little to attract foreign inyestment in the future. The Oyerseas Priyate 
Inyestment Corporation (OPIC) concluded an agreement with the 
Bangladesh Goyernment in 1975 which would facilitate the insuring 
of U.S. inyestments against war and expropriation (among other 
"noncommercial" risks). The actual issuance of insurance for potential 
U.S. investors, howeyer, has been held in abeyance pending the com- 
pensation of U.S. investors for losses during the 1972 nationalizations. 
The S9ttle:nent of these claims is now being negotiated. 

Bangladesh lias some promising natural gas possibilities. Seyeral 
U.S. firms haye engaged in offshore exploration and another firm has 
formalh^ signified interest in a natural gas field with the objectiye of 
exporting liquefied natural gas. It appears, howeyer, that the high 
inyestment costs of producing LNG will prevent any development of 
these resources in the near future.'^^ 

Sri Lanka (Ceylon) 

The U.S. economic interest in Sri Lanka is minimal. Imports of 
U.S. products by Sri Lanka amounted to only $37 million in 1976, over 
half of which consisted of Public Law 480 wheat shipments. U.S. 
exports rose to $53 million in 1977. U.S. imports of Sri Lanka products, 
mainly tea and rubber, totaled only $43 million in 1976, but rose to 
$67 million in 1977. Due to an historically adverse investment climate, 
U.S. investment is less than $2 million. In the past the Sri Lanka 
Government has emphasized economic policies which included state 
ownership, income redistribution and subsidized consumption of rice 
and othor basic comrnodities, all of which impeded economic growth 
and discouraged internal and external investment. ^^ The recent change 
in Government has led to changes in economic j)olicy including a 
movement away from subsidized food consumption. Present trends 
remain decidedly adverse. Sri Lanka imports nearly half of its food 
grain consumption, a very large figure for a small country with many 
natural advantages. 

Humanitarian Interests 

Historically, humanitarian concerns have been one of the prime 
justifications for U.S. involvement in the South Asian region. Along 
with the desire to reduce price-depressing agricultural surpluses, 
hu manitarian concerns were an important motivation for the massive 

30 U.S. Departmont of Stalo/Dppartmontof Comnicrce. Foreign Economic Trends and their Implications 
for the United States; Bangladesh, No. 77-0:U (March 1977); Department of Commerce. Highlights of U.S. 
Export a-id Import Trade. FT UUO'December 1976: 1977. 

3' U.S.I )epart meni of Si at el 1 )ei)artment of Commerce. Foreign Economic Trends and Their Implications 
for the United States: Bangladesh. No. 77-O.M (March 1977): Tolecon with Department of State, Mav 17, 

32 U.S. Department of Stnte/Dopartment of Commerce. Foreign Economic Trends and Their Implications 
for the United Stales. Sri. Lanka. No. 77 010 (Jaiuiarv 1977); Department of Commerce, Highlights of V.S. 
Export and Import Trade. Ft 990'Decenii)er l'.l76 (fssned Fehruarv 1977). 


U.S. food assistance i)roi»,Taiiis of the 195()'s and 1960's.'" For nio>t of 
the 1970's, U.S. food grain prochiction has I'ound ready commercial 
purchasers, especially during the worldwide shortages ol* 1972-7-:}. 
Still, the United States has maintained sizable food grain assistance 
programs, including low-interest sales under title I of Public Law 480, 
and grants, largel}^ channeled through voluntary relief agencies, under 

U.S. economic assistance to South Asian countries since fiscal year 
1974 is shown in table 3. 

(In thousands of dollars; fiscal years) 

Country and program 





Development aid 20,011 18,621 21,350 

Peace Corps 745 877 1,080 

Public Law 480; 

Title I 

Title II G69 6,139 1,156 

Total 21,425 25,637 23,596 


Development aid 60,796 64,839 87,000 

Peace Corps 

PuDlic Law 480: 

Title I -. 44,753 47,475 45,900 

Title II 17,337 16,577 11,851 

Total 122,857 128,891 144,751 


Development aid 60,000 90,000 

Peace Corps 

Public Law 480: 

Title I 41,789 27,800 30,900 

Title II 103,930 94,071 99,337 

Total 145,719 181,871 220,237 


Development aid 6,759 12,106 17,000 

Peace Corps 1,203 1,417 1.341 

Public Law 480: 

Title I 

Title II 894 2,030 483 

Total 8,856 15,553 18,824 


Development aid 52,715 51,805 69,000 

Peace Corps 

Public Law 480: 

Title I - 51,400 57,600 52,300 

Title II 227 1,887 1,113 

Total 104,342 111,292 122,433 

Sri Lanka: 

Develoomentaid 20,900 23,000 25,000 

Peace Corps 

Public Law 480: 

Title I 36,281 el, 400 16,800 

Title IL... 3,729 3,881 4,660 

Total 60,910 58,281 46,460 

Grand total. 464,109 521,525 576,301 

Source: Agency for International Development. 

33 Sec. 2 of Public Law 480, the Agricultural Trade Development and Assistance Act of 195-t, as amend- 
ed, contains the following identification of U.S. policy: "to expand international trade; to develop and 
expand export markets for U.S. agricultural commodities; to use the abundant agricultural productivity 
of the United Slates to combat hunger and malnutrition and to encourage economic development in develop- 
ing countries, with particular emphasis on assistance to those countries that are determined to improve 
their own agricultural production; and to promote in other ways the foreign policy of the United States." 


In recent years criticism has been made of the tendency of aid 
receiving nations to use food and development aid to maintain pohtical 
support from key groups in societ}^ especialty the urban middle 
classes. This criticism has been strongest in regard to U.S. conces- 
sionary food grain sales to Bangladesh under title I of Public Law 480. 
The general thrust of these criticisms lay behind several amendments 
to the law to (a) give priority to countries that use the proceeds from 
sales of title I commodities to improve the nutrition of the rural poor 
and to increase investm.ent in agriculture for the benefit of small 
farmers; and (6) to focus food aid programs generally on the poorest 
nations (i.e., with less than $300 per capita annual income). ^^ The 
degi-ee to which the congressional mandate has been carried out in 
regard to benefiting the rural poor is a subject of controversy. 

The preeminence of the United States in international grain markets 
is an inescapable fact, and one that will likely continue to play an 
important role in U.S. policy toward South Asia. Currently, U.S. 
food aid is much less important than in the past. This is a product 
botli of a reduced margin of agricultural surplus in the United States 
and three successive good harvest years in South Asia. Inevitabl}', 
however, the natural cycle of good and bad monsoons will raise the 
specter of widespread hunger in one or more countries of the region, 
and again confront the United States with the decision of whether to 
transfer its grain reserves to South Asia on concessional terms. 

An even more recent issue not readily susceptible to quantification 
is that of human rights and the political process in South Asia. Amer- 
icans generally applauded the end of the emergency in India and 
more recently, the change of government in Sri Lanka through tradi- 
tional democratic institutions. On the same grounds the developments 
in Pakistan have been closely watched. Historically, the feeling that 
these issues are important has seldom been translated into concrete 
])olic3?' terms. President Carter dwelt heavily on the human rights 
issue during his visit to New Delhi in January 1978, and the restora- 
tion of democracy was cited as justification for a congressional amend- 
ment to fiscal 1978 Foreign Assistance Act to authorize $60 million in 
development assistance for India. It remains to be seen, however, 
whether human rights considerations will substantially affect U.S. 
])olicy in the region. 

3< AH of tlie Soulh Asian count ii( s fall into the pooifst category on the basis of per capita income, although 
the economic, technological, and administrative infrastructures in India and Pakistan are more developed 
than many nations having higher per capita incomes. 


The nature of South Asia's significance to the United States can be 
illustrated more graphically by considering ])lausible dcveloj)ments 
that could affect U.S. interests adversely. While this is a rather nega- 
tive way of making the point, it is in keeping with the general thrust 
of many assessments of U.S. interests in the region, including those 
noted in the preceding section. 

India-Pakistax Conflict 

The heretofore endemic rivalry between India and Pakistan has 
always represented a threat to the stability of the subcontinent and a 
potential source of superpower conflict. The risk of a new Indian- 
Pakistan war was receded somewhat due to the outcome of the last 
(1971) war, in which India achieved decisive military superiority 
while, Pakistan was reduced to its western wing, and its sources of 
extraregional military and diplomatic support were found to be un- 
reliable. In addition, India moved further toward a de facto permanent 
settlement of the Kashmir issue (to the extent that the policy was sup- 
ported by the Kashmiri people) by the February 1975 reinstatement 
of Sheikli Abdullah as Chief ^Iinister of the state, thereby ending a 
longstanding source of Kashmiri discontent and defusing one rationale 
for Pakistani intervention.^ This policy was continued b}' the Desai 
government, even though the Janata Party contested unsuccessfully 
with Sheikh Abdullah's national conference in the June 1977 election.^ 

Despite the seeming Indian upper hand and better relations since 
the 1971 war, both countries still evince a deep concern for their 
security vis-a-vis each other. Once India eliminated a two-front 
threat by contributing morally and materially to the emergence of 
an independent Banglasdesh in 1971, her strategists quickl}^ remem- 
bered that, in 1965, one motivation for not carrying the war to East 
Pakistan had been the realization that success would thereby remove a 
strategic liability for Pakistan and facilitate a consolidation of forces 
in the west wing (the Bengalis were always a minor element in the 
Pakistan military forces).^ Fairly typical of Indian thinking on the 
post-1971 India-Pakistan military balance is an article by Ravi 
Rikhye in the January 1976 issue of Armed Forces Journal Interna- 
tional. After allowing for supposed geographic advantages possessed 
by Pakistan and the threat to India from China, Rikhye compares 
Pakistan's forces favorably with those of India and concludes that 

J G. G. Bhargava, "India'<^ Security in the 1980's." Adelphi Papers, No. 125 (summer 1976). London. 
International Institute for Strategic Studies, p. 5. See also, David E. Lockwood, "Sheikh Abdullah's 
Reinstatement," The World Today, June 1975. 

2 The State of .Tammu and Kashmir retains nominal autonomy and a special constitutional status in the 
Indian Union. The degree of actual autonomy has long been a* source of contention between New Delhi 
and the state, and arose again with some bitterness in the Jiuie 1977 state elections. Both the .Tanata Party 

and the Congress Party candidates generally opposed Kashmir's special status, but Prime Minister Desai 
gave assurancu^s that tlie 1975 compromise would not be overturned. Mohan Ram, "Kashmir, Voters Boost 

;e MoE 


Autonomy— Rebuff New Delhi," Christian Science Monitor, July 6, 1977, 
3 Bhargava, op. cit., pp. 10-11 


''because the balance is so fine, Pakistan might at any time consider 
it worth its while to use force in settling old scores." ^ 5lore or less the 
same point is made by K. Subraiunanyam, the influential former 
director of the Indian Institute for Defense Studies and Analyses. 
While less alarmist about the likelihood of a new war, SubrahmanA^am 
lists six circumstances in which war might ''break out." Among the 
circumstances cited by Subrahman3^am are the breakdown of the 
ethnic eciuilibrium in Pakistan leading to refugee pressures on India 
(as in the Bangladesh situation in 1971) and the seizure of power by 
Army leaders "swayed by a spirit of revanchism toward India." ^ 

While the thinking of Indian strategists about Pakistan's ca])abilities 
and ambitions is important, these views look alarmist to other ob- 
servers. Moreover, they do not seem to be shared by Prime Minister 
Desai. The signs seem clear that Pakistan has given up any real hope 
of achieving its goals in Kashmir by military means, and the estimates 
of Pakistan's military capability, cited above, do not square with those 
of Western observers, including U.S. Department of Defense officials. 
The current militar}^ force levels and principal equipment of India and 
Pakistan are shown in table 4. 







Military service 

Total Armed Forces 


1 096 000 

. Voluntary. 

Estimated GNP 1975 


. $10,100,000,000. 

Defense expenditure 1977-78 


. $820,000,000. 


950 000 


Armored divisions 

Infantry divisions. 

Mountain divisions 

Indep armored bdes 

Indep inf bdes 

.... 2 

- ... 17 

.... 10 

.... 5 

. . 1 

. 2. 

. 14. 

: 3. 

. 3. 

Para AD bdes 

1 . . 

. 2. 

!ndep arty bdes 

Aviation sqdns 


! 5. 

JVIedium tanks 

180 "Centurian" 

. 250 M-47/-48. 

900 T-54/-55/-62 

50 T-55. 


700 "Vijayanta" Med (Indian built)... 
46,000 (inc. Air).. 

. 700 T-59. 
. 11,000. 


Aircraft Carriers 

8 (Soviet F class). 

1 (25 ac) 

. 3(Fr "Daphne" class). 


. 1 (tng ship). 





Fast guided missile boats 

25 (4 Indian built "Leander" class, 10 

Soviet "Petya" class). 
8 "Osa"-class with Styx SSM 


Patrol boats... 

8 (inci 5 "Poluchat" class).. 

. 19 (ex-Chinese). 


. 7. 

Landing ship/craft-. 

.... 1/5 


Attack Sqdn 

MRSqdn. . 

.... 1(25 "Sea Hawk") 

2 (incI 12 "Alize" and 9 Super "Con 

Hel sqdns 

ASW sqdns 

Air Force 

stellation,"3 11-38). 
2 (with 22 "Alouette" III) 

2 (with 12 "Sea King" Hel) 

100 000 

' 17,000. 

Lt bmbr sqdns 

Fgtr/gnd attk sqdns 

3(50 "Canberra") 

13 (100 Su-7B, 50 HF-24 "Marut" lA, 

. 1 (11 B-57B). 
8 (60 F-86, 100 Mig-19/F-6). 

Fighter sqdns 

65 "Hunter" F56). 

4(30 "Mirage" lll,28VPA). 

lnte,ceptor sqdns 

18(270 Mig-21F, 130 "Gnat" Mk 1).. 

Recon sqdns 

MR sqdns 

1 (6 "Canberra" PR57) 

1 (13 "Mirage" IIIRP). 
. 1 (3 "Atlantic," 2HU-16B)(60 various 

Transport sqdns 

Helicopter sqdns 

SAM sites 

11 (118 acft) 

tpt acft). 

.... 12 (323 acft) 

?n w/i?o.<;a-2 


Source: international Institute for Strategic Studies, "The Military Balance," 

1977-78 (London, 1977). 

* Ravi Rikhye, "Pakistan Roarmod?", Armed Forces Journal Intmnalional, January 1976, p. 13; 
' Quoted in Bargava, op. cit., p. 12. 


Pakistan is even more a])j)rehensive about India, especially as a 
result of India's 1974 explosion of a nuclear device. Pakistan is also 
deeply troubled by pressures for autonomy or outrii^ht secession in 
two of its four provinces; namely, Baluchistan and the Northwest 
Prontier Province. These autonomist urires were amon^r the major 
pressures which underlay the disorders and internal ])olitical strife 
leadiniT to the recent military couj). Riuhtly or wron2;ly, some Pakis- 
tanis fear that India might sieze u})on these stresses and tendencies 
as a possible excuse for future Indian intervention and the complete 
dismemberment of the country. Pakistan has similar fears of Soviet 
backed meddling by neighboring Afghanistan in these tribal areas. 

On balance, the prospect of a new India-Pakistan War seem unlikely. 
The main element of unpredictability is the unstable political situation 
in Pakistan. 

A new war between India and Pakistan could prove even more 
dangerous to U.S. interests than in the past. Pakistan's western 
neighbor, Iran, has a stake in Pakistan as a buffer against India and 
as a damper on autonomist pressures of its o^^^l minorities. Growing- 
Iranian economic ties with India notwithstanding, a new Indo- 
Pakistan war could result in a wider conflict drawing in Iran against 
India. Due to the limitations on U.S. influence in the region and the 
weakness of Pakistan, the Soviet Union could well be in the best 
position to play a mediator's role. Several conceivable outcomes from 
such a struggle, including an early Soviet-sponsored cessation, would 
upset not only the stability of south Asia but also the military balance 
in southwestern Asia and the Persian Gulf. 

Ixdia-China Conflict 

India and China have been moving toward better relations since 
the 1971 Indo-Pakistan war. Relations at the ambassadorial level 
were reestablished in 1976, after a 14-year hiatus. The likelihood of a 
war such as the border war of 1962 seems remote, but cannot be 
ruled out as a plusible developm_ent. 

Relations with China continue to have certain natural sources of 
tensions. These include: India's policy in dealing with the Himalayan 
kingdoms of Nepal and Bhutan, which border on areas of relatively 
Aveak Chinese control;^ Indian sanctuary for the Dalai Lama and 
Tibetan refugees; the continued Chinese occupation of the disputed 
Aksai Chin region and the Chinese incursions in the Northeast Frontier 
Agency (NEFA) area; and Indian influence over Bangladesh. The 
latter factor has become less important since the overthrow of Sheikh 
Mu jib's government in 1975. 

Both India and China have been characteristically direct in fur- 
thering their regional interests. India has considerable geographic and 
Iiistorical, and now perhaps military, advantages over China in the 
buffer state areas. ^ The Indian Army occupied Sikkim (an Indian 
protectorate) in 1965 in response to a Chinese threat during the second 

« See Leo Goodstadt, "Putting the Accent on Minorities," Far Eastern Economic Review, Nov. 14, 1975 
pp. 17-18. 

' India now has 10 mountain divisions in the Himalayan region and good air capabihty. INIany observers, 
credit India with sufficient power to deal with any Chinese attempt to extend the de facto border at India's 


Indo-Pakistan war, and India formally incorporated the kingdom as 
an Indian state in 1975.^ 

India keeps a close watch on developments in Nepal and Bhutan, 
and does not shrink from behind-the-scenes involvement in the 
political affairs of those kingxloms. The basis of India's relationship 
with Bhutan is the 1948 Indo-Bhutanese Friendship Treaty which 
binds Bhutan ''to be guided by the advice of the Government of 
India in regard to its external relations." The independent kingdom 
of Nepal maintains close relations with China and has attempted to 
use Chinese friendship to keep India at arm's length, but the kingdom's 
main economic and communications links are with India and Indian 
influence is still paramount. 

Both China and India have also maneuvered against each other in 
Bangladesh. The hands of both countries were apparent to many 
observers in the succession of coups and countercoups in 1975, which 
saw the assassination of India's close ally Sheikh Mujibur Rahman, 
and a substantial diminution of Indian influence. China and Pakistan 
quickly recognized the new government proclaimed following the 
initial August 15, 1975, coup, and there were unsubstantiated reports 
that Indian and Chinese troops clashed on the Sino-Indian border.^ 
China applauded the supposedly anti-Indian character of the new 
government. The ill-fated November 3 countercoup was seen by the 
Chinese and others as the work of pro-Indian and pro-Soviet elements. ^° 

Notwithstanding the continued rivalry between the countries, 
an important point is that China shunned opportunities to intervene 
mihtarily in the 1965 and 1971 India-Pakistan Wars. While India's 
ties to the Soviet Union have weakened somewhat since the signing 
of the 1971 Treaty of Peace, Friendship, and Cooperation, China 
must still consider the consequences of Soviet support for India in the 
event of a new India-China conflict. The prospect for the near-term 
future, therefore, is one of constant political maneuvering but not 
miUtary conflict. 

A new India-China conflict would pose problems for the United 
States even if it stayed aloof. In fact, the very avoidance of involvement 
would entail deflnite diplomatic and political costs. Relative Chinese 
success could strengthen Soviet influence in India, while relative In- 
dian success could weaken China and tend to drain resources from the 
China-U.S.S.R. border. 

Crop Failure in India, Pakistan, or Bangladesh 

Foodgrain production has kept marginally ahead of ])opulation 
growth in India and Pakistan since the early 1960's, while falling 
behind in Bangladesh and Sri Lanka. The ])ossibility of a widespreacf, 
weather-induced crop failure is a constant danger, especially in India 
which is more de])en(lent on the rains for a successful crop. The main 
monsoon season in India beginning about June or July is alwa3^s erratic, 
and generally deposits too much rain in some ])arts of the country — 
thus pro(hicing disastrous flooding — and too little elsewhere. Failure 
of the sparser winter rains can also be serious, as double cropping is 
(customary in many areas. 

8 Kussoll Briiios, "Wliat Tiulia Spcs in Sikkim," Christian Science Monitor, May 16, 1975. 
• Fiir Ea'^lrrii Econoiiiic Review, Oct. ;n, 1975, p. 5. 

>o Tjiluk(l(^r Maiiinizzaniiui, "BaiiKladesh ill 1975: The Fall of the Mujib Regime and its Aftermatli," 
Asian Siuvoy, vol. XVI, No. 2 (February 1976, pp. 123-125). 


India has traditionally siifTcrod more from food sliortagcs tlian 
Pakistan. Part of the exj)hination for this Hes in the fact that wliereas 
Pakistan (including the former East Pakistan) got 20 percent of the 
po})ulation of prepartition India, at independence it got .'^0 percent 
of area under wheat cultivation and 28 })ercent of the land under rice 
cultivation. India received 84.4 percent of the total sown area of 
preindependence India but only 71 percent of the irrigated lands. '^ 

On the whole, food-grain ])ro(luction in India has kept just ahead 
of population growth. India's ])opulation in 1951 totaled about 361 
million and food-grain production was about 50 million metric tons. 
With a population of just over 600 million in 1976, India's food-grain 
production was about 121 million metric tons in 1975-76 and 112 
million tons in 1976-77.^- The 1977-78 crop is now estimated at 125 
million tons, an alltime record. ^^ Because the population has increased 
by half again in the last two decades, the sizable increases in food- 
grain production have thus far provided only marginal increases in 
per capita output. There are some indications that food-grain output 
may now be accelerating at a rate substantially greater than that 
attributable solely to several consecutive years of favorable weather. ^"^ 
The significance of these recent advances will only be certain after 
a cycle of good and bad v>'eather. 

Currently, India has buffer stocks of about 14 million metric tons of 
food grains. Due to the record wheat harvest, the Government-o\\TLed 
Food Corporation of India is accumulating additional stocks at the 
rate of 3 million tons per month. ^'^ Given the current surplus situation, 
India could probably sustain 1 or even 2 drought years without 
buying significant quantities of grain from abroad. The Government's 
ability to purchase foreign grain, should that become necessary, will 
be greatly facilitated by hard currency reserves of over $5 billion. ^^ 

No country in South Asia current!}^ faces the imminent threat of 
widespread famine. Sri Lanka and Bangladesh are likely to remain 
food-deficit countries for the foreseeable future, however, and de- 
pendent on external sources. India w^ill likely remain a food-deficit 
country except during periods of favorable weather (as at present). 
Pakistan will also likely remain a food-deficit country, but less subject 
to radical swings in food-grain production. Bangladesh has little or no 
buffer stocks and a ver}^ weak transport and administrative structure. 
India as noted above could sustain 1, or possibly 2 years of bad 
weather before having to turn to external sources for major food 
shipments. Any severe natural catastrophe in Bangladesh, however, 
would almost certainly require increased external assistance to avert 
widespread famine. Even the achievement of nominal food self- 
sufficiency by any of these countries will not eliminate major de- 
ficiencies in per capita caloric and protein intake. 

In the short run the main threat to the United States and the rest 
of the world from harvest failures in South Asia is the disruption of 

11 B.M. Bhatia, "Famines in India: A Study in Some Aspects of the Economic History of India (1860- 
1%.5)." Bom])ay, Asia Publishing House, 1!;67. p. 340. Irrigation is much more crucial in Pakistan, where 
the average annual rainfall is only about 10 inches. 

12 Clovernment of India. Economic Survey, 1976-77, pp. 59-6.5. 

13 -'India's Crops are Setting Record," New York Times, Apr. 26. 1978, p. A3. 

1* "India's Crops are Setting Record," New York Times, Apr. 26, 1978, p. 2; WilUam Borders, "Canal in 
India Raises Productivitv 'Like a Miracle,' Farmer Reports," New York Times, May 9, 1978; Richard 
Critchfield, "The Changing Face of Rural India," Christian Science Monitor, July 3, 1978, pp. 12-13. 

15 New York Times, Apr. 26, 1978, op. cit. 

16 This assessment is based on conversation with a responsible official of the Embassy of India, Apr. 14, 


grain markets and inflationar}^ price rises. Recent experience has shown 
that large production faikires, whether in South Asia, the U.S.S.R., or 
other important grain producing regions, can have injurious effects on 
world grain markets, including inflationar}^ price increases and dis- 
ruptive price falls when production recovers. In the longer run, in- 
creased agricultural production in South Asia contributes importantl}' 
to the continued ability of the world to sustain its increasing 

Breakdown of the Central Government in Any South 
Asian Country 

All of the countries of South Asia have serious problems of re- 
gionalism, political instability, and racial and ethnic animosities. Save 
for the breakaway of East Pakistan, which was a special case, the 
countries of the region have generally succeeded in keeping centrifugal 
forces in check. One legac}' of British rule that was incorporated in the 
constitutions of both India and Pakistan was strong emergenc}^ powers 
such as the invocation of President's rule over otherwise democratically 
elected provincial governments. In general it can be said that cen- 
trifugal forces in South Asia are greater than is the case in the indus- 
trialized West but weaker than in many less developed countries. 

The consequences for U.S. interests of fragmentation would be 
greatest in the case of India and Pakistan and least in the case of 
Bangladesh arid Sri Lanka. A breakdown in the authority of the 
central government in the latter two countries vrould probably lead to 
some kind of Indian intervention without necessarily prompting the 
involvement of neighboring states. A breakdown in the central 
government in India or Pakistan, however, could have extraregional 
effects, possibly even involving one or more superpowers. 

Save for still sizable minorities of Hindus and hill tribe peoples, 
Bangladesh is now relative^ homogeneous, though strong factional, 
regional, and political differences continue to challenge the authority 
of the current martial law administration. Many of the difficulties of 
the central government have geographic roots. The country consists 
almost entirely of an alluvial plain formed by three great river systems 
the Ganges-Padma, Brahmaputra- Jumna, and Meghna. The country 
thus consists of an immense delta cut up by numerous shifting river 
courses. Communications are extremely difficult and the historical 
problems of banditr}", political dacoity (armed gang violence with a 
thin veneer of political motivation) and localism continue to challenge 
the authority of the government. These problems were aggravated by 
the violent nature of the initial 1975 coup, in which Sheikh Mujib, his 
family, and many of his followers were killed. The Sheikh's Awami 
League retains both bitter memories and an extensive organizational 
network, and the country contains a host of other political factions, 
including militant Marxist groups, which will continue to make life 
difficult for the military government. ^^ 

Sri J^anka also has serious internal stability ])roblems, including 
a basic rivalry between the majority wSinhalese ])opulation and the 
minority 'i'aniil grouj). A rebellion in 1970 on the part of mainly rural 
Sinhalese-Buddhist, pro-Chinese Marxist-Leninist, young ])eople took 

>■ So,> Robert R. Andorson, "Impressions of Banpliulosh: the Rule of Arms and Uio Politics of Exhorta- 
tion," Pacilic AHairs, vol. 41), No. 3 (Fall lOTti), pp. 413-475. 


a significant toll in death and property dama<2:e. The revolt was j)iit 
down with material assistance from India, including military and 
economic aid. Sri l^anka recently held national elections in which, 
for the sixth conse(;utive time, the government changed liands. The 
elections were followed by some serious Sinhalese-Tamil violence and 
J. R. Jayewardene's United National Party governrn(^nt may liave 
difficulty in dealing w^ith the kind of economic and other frustrations 
which contributed to the earlier insurgency. 

The likelihood of a breakdown in the central authority in India is 
})robably not great at this time, though there are a few ])otcntially 
ominous signs. The March 1977 elections released a great deal of pent- 
up emotion and the government of Prime Minister Morarji Desai 
entered office wdth a large stock of good w-ill. The Janata Party gov- 
ernment, how^ever, is a coalition of disparate groups originally unified 
mainly by their opposition to Mrs. Gandhi. The ability of the gov- 
ernment to work smoothly and to deal effectively w ith India's prob- 
lems is still in doubt. ^^ Other potential problems include the poor 
show^ing of the Janata Party in Tamil Nadu, Jammu and Kashmir, 
and Bengal, during the state elections last summer, the more recent 
successes of Mrs. Gandhi's Congress faction in state elections in 
South India, and the certainty that eventually the w^eather wdll turn 
unfavorable causing a new^ inflationary spiral and again bringing to 
the fore the underlying tensions in the Indian political system. The 
Communist Party-Marxist (CPM) w^hich w^on office in Bengal, has 
for the moment foresworn the tactics w^hich led to the institution of 
President's rule in 1971, and current reports from India indicate 
satisfaction wdth the state governm^ent's policies even among the 
business community. The experience of the last CPM government 
during 1967-69, and 2 subsequent 3^ears of violent political warfare 
betw^een the CPM, the pro-Moscow^ Communist Party of India (CPI) 
and the Congress Party howxver, left vivid memories w^hich have not 
been entirely erased. ^^ On balance it should be recalled that the central 
government in India has never broken dow^n in the 30 years since 
independence and its foreseeable challenges do not appear more 
severe now^ than at times in the past. 

By any measure Pakistan faces the greatest threat of disintegration. 
For a variety of reasons, not the least of w^hich is geographic, such a 
result w^ould be adverse from the U.S. point of view^ The current 
martial law^ situation and the breakdown of the political process w^hich 
led to it are the direct result of centrifugal forces in Pakistan. The 
promised October 1977 elections have now^ been indefinitely post- 
poned. In any event it is doubtful it the electoral process can produce 
a national government capable of ruling w^ith at least the acquiescence 
of regional and tribal factions. The aspirations of the minority Pathan 
and Baluchi parties have been regarded as antinational by the Punjabi- 
dominated Pakistan People's Party (PPP) , and it is hard to see how 
the current differences can be resolved peacefully. 

i« See William Borders, "Desai, After Euphoric Start, Faces Frustrating Problems." New York Times, 
Sept. 27, 1977; A. Hariharan, "A vote for Instability," Far Eastern Economic Review, Mar. 10. 1978, pp. 22-24; 
"Governing with a Broken Heart," ibid., Mar. 31, 1978, pp. 20-22; "India's Cmelist Month," The Economist, 
Apr. 22, 1978, pp. 75-76. 

" See the following: Richard Nations, "The Challenge for Janata," Far Eastern Economic Review, Apr. 
22, 1977. nn. .332-3.35; Mohan Ram and Javanta Sarkar, "Red Star over Bengal," FEER, July 8. 1977, pp. 
27-29; William Borders, "Once-Volatile Indian State Peaceful Under Red Rule," New York Times, Jan. 
28, 1978. 


The most recent threat to the stabiUty of Pakistan was the con- 
viction of former Prime Minister Bhutto before the Lahore High 
Court on a charge of having conspired to have a poUtical opponent 
murdered. Bhutto's Pakistani People's Party supporters have charged 
that the trial was unfair and that the military leaders are ''determined 
to eliminate him [Bhutto] from the political scene." In the event of 
Bhutto's execution widespread disorders may result. ^^ 

In terms of the stability of the region, a hopeful sign is that neither 
India, Iran, nor Afghanistan have injected themselves into the Pakistan 
situation. All view the situation warily, however, and at least a poten- 
tial exists for the fragmentation of the country and the active involve- 
ment of its neighbors, including the possibility of armed conflict. ^^ 
As noted earlier, such a development would not onl}^ destabilize the 
South Asia region but could lead to increased Soviet influence in South 
Asia and to a long-term rivalry between India and Iran. 

Proliferation of Nuclear Weapons Capabilities in South Asia 

Currently both India and Pakistan have access to nuclear materials 
and technology on the basis of less rigorous nonproliferation safe- 
guards than those the Nuclear Non-Proliferation Act of 1978 has estab- 
lished as a requirement for U.S. nuclear cooperation. India has already 
exploded a "peaceful nuclear device." Pakistan, upon the consumma- 
tion of a contract with France for the construction of a nuclear re- 
processing facility, will theoretically have the capability to manu- 
facture nuclear devices. 

India is already a meimber of the ''nuclear club" in m.ost respects. 
Its nuclear program dates back to the establishment of the Tata 
Institute of Fundamental Research in 1945 and the creation, in 1948, 
of the Indian Atomic Energy Commission under the chairmanship of 
Dr. Homi Bhabba. An experimental reactor of Indian design and con- 
struction went critical in 1956. A larger research reactor ("Cirus") 
built with Canadian assistance in the late 1950's and operated with 
some U.S. -supplied heavy water almost certainly provided the pluto- 
nium for Incha's 1974 explosion beneath the Rajasthan Desert. 
Currently India has four research reactors, six power reactors in opera- 
tion or in various stages of construction (including two General Elec- 
tric 190-megawatt reactors at Tarapur, near Bombay), heavy water 
plants, chemical reprocessing facihties, plants for fabricating reactor 
fuel, and its own sources of uranium and thorium. India has also a 
breeder reactor program. The termination of Canadian nuclear co- 
0])eration with India following the 1974 explosion has had little 
material impact on India's i)rogram. The import content of the cur- 
rent Madras Atomic Power Project (two 200-megawatt Canadian- 
type reactors) is only 24 percent. India's remaining dependence on 

20 William Bordors, "Bhutto Considering DoathVerdict Fight," New York Times, Mar. 19, 1978, p. 7, 

21 Landlockod Afgiianistim hsvs long harljorod irrodonlist designs on Pakistan's two western provinces. 
There have lieen numerous occasions in the past when Pakistan has accused Afgliauistan of connivance with 
India and/or the U..S.H.R. to acliiove that dream. Except for occasional l)()r(li'r skirmishes, however, tho 
conflict has boon kept wittiin dii)lomatic, propagandistic and economic channi>ls. Recently relations between 
Pakistan and Afghanistan have been relatively cordial. A new and y(>t unpredictable element was added by 
tho April 1978 military coup that resulted in tho dcKilh of President Alohanunad Daoud, and tiio installation 
of an alleged Communist civilian, Nfur .Mohammad Taraki, at the liead of a revolutionary council. Whilo 
President i^aoud h id irni)rovod relations witii Pakistan and had att(Mnpt(>d. witli some skill, to balance tho 
heavy Sovi(!t prosoncoiu Afglianistan by cultivating ties with oMiit countries, including Iran and tho United 
States, tho policy of tiio \m\v government remains to be seen. Willi un iJorders, "Afghanistan iNTames Chief, 
and Soviet Rec)gniz(5s lie^ioKv" S>^\v York Time^, May 1, r.i7'<, p. A-I, 11; Mohiu Ram, "Afghanistan 
Tiltod to Loft by Coni)," Christian Sciencio Monitor, .May 1, 1978, p. 6; Simon Winchostor, "Afghan Loaders 
Boom Determined to Stay ludopondent," Washington Post, May 8, 1978, p. A-16. 


foreign sources relates mainly to minor components thai are not eco- 
nomical to produce locally. So far there has heen no diflicuHy in of)- 
taining these items from Western European countries. ^^ 

At present Pakistan has only one Canadian-built ])ower reactor of 
125 megawatts in oj)eration and a 600-megawatt reactor imder con- 
struction. It has, however, also purchased a reprocessing plant from 
France which will produce plutonium from spent reactor fuel. This 
project produced a major source of friction between the United States 
and France and Pakistan. The plant will be operated under Interna- 
tional Atomic Energy Agency safeguards. ^^ Proponents of Pakistan's 
nuclear program have been quite open in acknowledging the country's 
political and potential military motives. Reportedly, Pakistan's 
power reactors will not be able to use fuel from the reprocessing plant 
until more than a decade from now, a seeming economic liability that 
raises questions about Pakistan's objectives. 

Neither India nor Pakistan is yet immune to pressure from the 
nuclear powers, even though the U.S. antiproliferation policy has not 
received complete support from other suppliers of nuclear technology. 
The question of India's actually building nuclear weapons and 
acquiring some kind of delivery capability is more a policy question 
than a practical one. Pakistan's acquisition of any significant weapons 
capability is a longer term proposition. The main constraints on the 
development of at least a demonstration nuclear device, however, are 
those that relate more to policy perceptions than to practical problems. 

Either India's acquisition of nuclear weapons or Pakistan's crossing 
the nuclear weapons threshhold would go a long way toward accelerat- 
ing nuclear weapons proliferation. From the point of view of both 
countries such a step would be justified, if they conclude the benefits of 
nuclear weapons outweigh the drawbacks, as neither accepts the basic 
"discriminatory" premises of the Non-Proliferation Treaty. 

There is little reason to expect that India or Pakistan would more 
readily resort to the use of nuclear weapons than w^ould the major 
powers. The psychology of deterrence, however, has the same appeal 
for South Asian countries as it does for the weapons powers. Still, the 
increase in the numbers of weapons states, especially in a region with a 
history of frequent military conflict, cannot but increase the odds that 
nuclear weapons will again be employed in future warfare. 

" Extension of remarks by Representative Melvin Price, Congressional Record, House, May 22, 1974, 
pp. H4330-32; Robert Gillette, "India: Into the Nuclear Club on Canada's Shoulders," Science, vol. 184 
(June?, 1974), pp. 1053-55; Trevor Drieberg" Journal of Commerce, June 11, 1976: and George Bindon and 
Sitoo Mukerji, "How Canada's and India's Nuclear Roles Have Been Sadly Misrepresented, Science Forum, 
vol. 10 (February 1977), pp. 3-7. 

»3 " France to Add Safeguards to Nuclear Pact with Pakistan," New York Times, Jan. 10, 1978; Iqbal 
Akhund, " Pakistan and the Atom," New York Times, Apr. 23, 1976. 


Basic Features 

U.S. policy toward South Asia has been largely reactive since the 
1971 Indo-Pakistan war. India's military successes in that war, the 
birth of Bangladesh, and the apparent creation of a new regional 
system dominated by India undercut the previous basis of U.S. policy. 
For a variety of reasons, including the low priority given to the region 
and the uncertainty of trends, the United States did not initially feel 
compelled to make any basic adjustment of its policy in the subconti- 
nent. Since 1973, however, the U.S. has gradually shifted toward a 
more frank acknowledgment of India's dominant position in the region. 

At base, U.S. policy in South Asia in the period immediately prior to 
1971 was predicated on great power considerations; that is, its global 
interests and relations with China and the U.S.S.R. and a perceived 
diminution of the region's importance from that which prevailed during 
the late 1950's and early 1960's.^ The Sino-Soviet split, a perceived 
lack of major threat or opportunity, and the U.S. absorption with 
extracting itself from Indochina had effectively removed South Asia 
as a significant factor, in U.S. global strategy. This lower profile 
policy toward South Asia, which involved a frank search for a ''stable 
balance" between the Soviet Union and China in the region, and a 
reduction of the U.S. role, was apparent prior to the 1971 war and was 
openly outlined in President Nixon's annual foreign policy addresses 
to the Congress in 1971 and 1972.^ 

U.S. policy toward the emerging crisis in East Pakistan in 1971 
developed in the context of the opening to China (including Dr. Kis- 
singer's secret visit to Peking via Rawalpindi, Pakistan, in July 1971) 
and the August 1971 Indo-Soviet Treaty of Peace, Friendship, and 
Cooperation. U.S. diplomacy and the ''tilt" toward Pakistan failed to 
forestall an Indian military solution to the Bangladesh crisis. More- 
over, the seeming insensitivity of the United States toward the suffering 
in East Pakistan and toward India's enormous refugee problem, earned 
widespread opprobrium both within the United States and abroad.^ 

The deployment of a task force from the U.S. 7th Fleet into the 
Indian Ocean and the Bay of Bengal during the Indo-Pakistan mili- 
tary conflict created further problems. The presence of the naval force 

> Barnds, " United States Policy Toward South Asia: Shifting Perceptions and Policy Choices," op. cit.» 
pp. 649-051. 

' Preoccupation with the Vietnam War (and discnpaprinp from it). Indian criticism of the U.S. Indochina 
policy, food crises and internal instability in India, and closer rolations between India and thoSovift Union 
on the one hand, and between China and Pakistan, on the other, all contributed to this chanpe in American 
policy. See Larry A. Niksch, the India-Pakistan War of Novembor-Dectmber 1971: background, cause, and 
the role of American diplomacy. Congr ssional Research Service, Multilith No. 72-99F, Apr. 20, 1972, pp. 

» As of December 1971 the United States had contributed some $900 million for the support of refugees in 
India and $155 million for relief in East Pakistan. The East Pakistan aid was provided through the Pakistan 
Govornmont, albeit with assurances that it would be distributed through international agencies. Back- 
ground press briefings on India-Pakistan with Ifenry A. Kissinger, Doc. 7, 1971, reprinted in Congressional 
Record, Doc. 9. 1971, pp. 821012-3. The doubtful value of the Pakistani assurances was noted in a Dec. 8, 
1971, cable by U.S. Ambassador to India Kenneth B. Keating, which was made available to the New York 
Times in "slightly paraphrased form" by columnist Jack Anderson and reprinted in the paper's Jan. 6, 1972, 



alarmed India, but did not deter it from carrying out its on^^oing 
military operations in East Pakistan.'^ In response to the U.S. action, 
India reportedly sought and received Soviet guarantees to support it 
militarily if attacked by the U.S. force.^ The U.S. naval buildup was 
followed by a surge of Soviet naval forces into the region.^ Since the 
1971 crisis, the Soviet presence in the Indian Ocean has been signifi- 
cantly higher than the prewar level.^ The extent, if any, to which 
developments during the 1971 war may have contributed to the long- 
term rise in the Soviet presence (aside from mine-clearing operations 
in Chittaffong: Harbor) is not clear. 

In the aftermath of the 1971 war the United States gradually 
evolved a policy of accepting the new facts of life in South Asia as 
long as neither the Soviet Union nor China would attempt to exert 
undue influence in the region. One basic assumption underlying this 
policy was the belief, thus far justified by events, that India would 
respect the territorial integrity of its neighbors. The United States 
backed the 1972 Simla talks between India and Pakistan and declined 
to be drawn into any effort to rearm Pakistan, even on a sales for cash 
basis. The United States became the principal provider of foreign 
assistance, primarily food aid, to the new state of Bangladesh.^ 

U.S. Relations with India 

The relationship between the United States and India has only 
recently recovered from the low ebb of the 1971 Indo-Pakistan war. 
In December 1971 the U.S. terminated the sale of agricultural com- 
modities for nonconvertible foreign currencies, thus ending a major 
aspect of the food program both for India and Pakistan. This was a 
consequence of amendments to Public Law 480 which were passed in 
1966, and not related to the crisis in East Bengal. The U.S. develop- 
ment aid program in India, halted during the 1971 war, was not 
reestablished until 1977. During the intervening years the United 
States participated in an aid-to-india consortium rescheduling of 
India's foreign debt; and the United States-India rupee settlement 
of 1974 reduced a longstanding source of friction by effectively writing 
off some $2.2 billion of India's local currency debt to the U.S. Govern- 
ment, with a notational earmarking of the funds for development 
projects in India's fifth 5-year plan.^ 

* Whether the U.S. action deterred a large-scale invasion of West Pakistan is problematical. 

5 Pran Chopra, "India's Second Liberation" (Delhi, 1973), p. 201. Chopra, who had access to highly placed 
sources in India, maintains that New Delhi obtained assurances on the night of Dec. 11, 1971, 1 day before 
the U.S. force reached the Bay of Bengal, of direct Soviet support in the event of attack by U.S. forces. 

•Testimony of William E. Colby, Director of the Central Intelligence Agency. U.S. Congress. Senate. 
Committee on Armed Services. Disapprove construciion on the island of Diego Garcia; hearings on S, 
Res. 160, June 10, 1975. Washington, U.S. Government Printing Office, 1975. 94th Cone., 1st sess., p. 31. 

7 Soviet Indian Ocean ship-days totaled 4,936 in 1970, 4,023 in 1971, 8,854 in 1972, 8,895 in 1973, and 10,501 
in 1974. The 1972-74 figures include about 2.500 ship-days per year attributable to vessels clearing mines in 
Bangladesh and the Red Sea. Testimony of Secretary of Defense James R. Schlesinger, ibid., p. 26. Soviet 
ship-day's in the Indian Ocean totaled 7,335 in 1976, and 4,186 through August 1977. Telecon with Office 
of Naval Intp.lUeence, Nov. 2, 1977. 

« Since the 1971 war the United States has provided more than $1 billion in bilateral assistance to Bangla- 
desh, far more than any other donor, and indirectly the United States has contributed several hundred 
million dollars more through international agencies. Department of State. Agency for International Develop- 
ment. U.S. Overseas Loans and Grants, 1975, and AID fiscal year 1978 submission to the Congress (Asia 

The settlement covered blocked local currency, in this case, rupees, owed to the United States for food 
sales under title I of the Agricultural Trade Development and Assistance Act (Public Law 480). The United 
States retained some $1.1 billion in rupees for its own purposes. In addition the Indian Government agreed 
to accelerate the conversion of certain other U.S. rupee holdings into dollars, viz. $(J4 million converted to 
U.S. dollars in 10 years rather than an earlier agreed upon conversion of •'551 million over a 40-year period, 
U.S. Congress. House. Committee on Foreign Affairs. Indian Rupee Settlement. Hearing before the Sub- 
committee on the Near East and South Asia, Jan. 29, 1974. 93d Cong., 2 sess. U.S. Government Printing 
Office, Washington, 1974. 113 pp. (text of settlement in appendix II, pp. 44-45). 


United States-India relations remained cool as a result of Indian 
criticism of U.S. policy in Indochina and over the U.S. decision to 
develop an Indian Ocean naval facility at Diego Garcia. Relations were 
further soured by India's explosion of a nuclear device in May 1974, 
a development which probably involved the use of some heavy water 
purchased from the United States that, in accordance with the terms 
of a 1959 agreement, had been commingled with larger quantities of 
heavy water produced in India. This led to the suspension of ship- 
ments of enriched uranium and heavy water for the U.S. -built Tarapur 
power reactor complex. Other irritants included a July 1974 amend- 
ment to the International Development Association Act (section 15) 
which required the U.S. representative to the International Develop- 
ment Agency to vote against loans to countries — India being the only 
example — which exploded nuclear devices but did not sign the Non- 
Proliferation Treaty. 

Another basic source of irritation in United States-India relations 
was Prime Minister Gandhi's frequent use of anti-American themes 
to appeal to her domestic leftist and Communist political allies, includ- 
ing accusations that the CIA was being used to destabilize her regime, 
and the generally unfavorable view by the United States of the post- 
1975 state of emergency. Prime Minister Gandhi relied on these 
themes less during her last year of power. The United States never 
warmed to the emergency but neither did it openly criticize the 
institution of authoritarianism.^^ 

The March 1977 elections and the victory of the Janata Party 
created an opportunity for an improvement in United States-India 
relations. Congress signaled its approval of the return of democracy 
to India by deleting section 15 of the International Development 
Association Act while adding a softer provision that does not single 
out India. President Carter and Prime Minister Desai exchanged 
cordial messages and Mr. Desai gave various indications that India 
would adhere to strict nonalinement, would voluntarily forgo any 
more nuclear explosions and had no desire to acquire a nuclear military 
capability. In May 1977 the Nuclear Regulatory Commission ap- 
proved the interim shipment of fuel for the Tarapur reactors, and 
President Carter made additional commitments regarding fuel ship- 
ments during his January 1978 visit to New Dehli.^^ 

The long-term prospect for a resolution of this and other issues is 
still far from clear, especially since the passage of the Nuclear Non- 
Proliferation Act of 1978. 

U.S. Relations With Pakistan 

U.S. relations with Pakistan remained ambiguous after the 1971 
war. While the United States resumed develoj)ment and food assist- 
ance, it declined to significantly facilitate Pakistan's rearmament. In 
1973, however, the United States ])artially lifted its embargo in 
respect to ^'nonlethal" military equipment. In February 1975 the 
10-year embargo on ''lethal" arms to South Asia was lifted, but only 

>« Barnds, "Unitod States Policy Toward South Asia: Shifting Perceptions and Policy Choices," op. 
cit., pp. 6.'>0^51. 

11 Mohan Ram, "Atomic Safopuards could cloud efforts to stal)ili7,e relations," Christian Science Monitor, 
Jan. 3, V.>7H, \). 'J. In April l'.t78 the Nuclear Regulatory Commission turned down an export of uranium fuel 
for the Tarapur jjower reactors, but I'resident Carter has overridden the decision. See pp. 43-44. 


to the extent of j)ermitting exports for cash on a easc-by-case basis. ^^ 
The pohcy of the United States regarding major weapons systems 
crystalhzed during 1977. In late 1976 the Department of Defense had 
recommended approval for a Pakistani ])iirchase of 110 A-7 light 
attack aircraft (rumored to be financed by Saudi Arabia). The Dei)art- 
ment of State, however, made known its intention to weigh the matter 
carefully and without any consideration of urgency, and the issue of 
the A-7's soon became identified with American displeasure over 
Pakistan's purchase of a nuclear reprocessing facility from France. Not 
only was the A-7 sale in abeyance, but reportedly, the Ford admin- 
istration also threatened Pakistan with the loss of American economic 
assistance if the agreement with France was consummated.^^ In June 
1977 the Carter administration decided against going forward with 
the A-7 sale. Rather than associating the decision with the French 
nuclear reactor issue, however, the administration stressed the harmful 
prospects of ''the introduction of a major sophisticated weapons sys- 
tem into South Asia," and placed the decision in the broader context 
of its global arms transfer limitation objectives.^* To date Pakistan 
has not sought any reopening of the A-7 question nor has it asked to 
purchase any substitute aircraft. 

« An exception was made for a 1970 sale of 300 armored personnel carriers (APC's) and some combat 
aircraft. Due to a more stringent embargo during and after the 1971 war the APC's, though paid for, were 
not released for delivery until 1973. Stephen P. Cohen, "U.S. Weapons and South Asia: A Policy Analysis," 
Pacific Affairs, vol. 49, No. 1 (Spring 1976), p. 62. 

i» "Pakistan Bomber Purchase Cleared by Defense Department," The Washington Post, Nov. 16, 1976: 
"U.S. Warning Pakistan on Nuclear Plant," Washington Post, Aug. 9, 1976; "Kissinger Meets Pakistani 
Leader on Nuclear Issue," New York Times, Aug. 9, 1976. 

" "U.S. A-7's Denied to Pakistan, but Door Open for Other Jets," Washington Post, June 4, 1977. 


Opinion on the future of South Asia and the most appropriate U.S. 
policies are as varied as the region itself. Views of experienced analysts 
and policymakers range from deep pessimism with a collateral recom- 
mendation of minimal U.S. regional involvement, to moderate opti- 
mism both for the region and for the benefits to the United States of an 
activist policy. In keeping with the uncertain state of collective wisdom 
on South Asia, official U.S. policy during the past half dozen years or 
so has closely adhered to a middle ground position of considerable 
ambiguity. There are some signs, however, that those who are charged 
with the development of policy options toward South Asia, i.e., the 
career officials of the Department of State, have adopted a cautiously 
optimistic view of regional developments and their implications for 
the United States. This view seems already to have influenced U.S. 
policy toward the region. The longer term direction of U.S. policy 
depends on how the President and his senior advisers see the regional 
situation in the context of larger policy objectives, on attitudes in the 
Congress, and most important, perhaps, on the attitudes and policies 
of the countries of the region. 

Alternative schools of thought regarding South Asia can be divided 
into three main categories: (1) Those who see India and other South 
Asian countries as essentially plagued societies, incapable of sur- 
mounting their manifold problems; (2) those who see India as an 
emerging regional economic and military power, with slower but 
possibly collateral developments in one or more additional countries 
of the region; and (3) those who read the signs as still uncertain. 
Within each main school of thought there are contrary opinions as to 
the significance of likely regional trends for the United States. As a 
plagued society, for instance, India could be either passive or aggres- 
sive in dealing with its neighbors. The same holds true for India as a 
regional power — India could use its power for either benign or aggres- 
sive ends. 

Likely Trends in the Midterm 

ECONOMIC development 

According to one widely accepted view of South Asia, India, Paki- 
stan, and Bangladesh, et cetera, are essentially societies incapable of 
dealing with their problems and facing either stagnation or a Mal- 
thusian future. Some influential contributions to this view come readily 
to mind: Gunnar MyrdaFs ''Asian Drama: An Inquiry into the Pov- 
erty of Nations"; and Bernard D. Nossiter's ''Soft State." 

Myrdal's influential three-volume work on South Asia (which actu- 
ally deals with both South and Southeast Asia) offers conclusions 
which, if correct, condemn the countries of the region to very slow 



development at best. In Myrdal's view most of the conditions wliich 
led to rapid growth in the Western countries were either lacking or, if 
present, were not applicable to the South Asian scene. Moreover, the 
countries of the region are gravely handicapped by social systems rent 
with inequality and unconducive to the adoption of modern tech- 
nology. The only hope for these countries, in Myrdal's view, lay in 
"radical state policies" on Socialist lines, in the absence of which little 
could be expected.^ 

The general view that India and other South Asian countries will 
not make much economic progress without a major restructuring of 
society is still frequently voiced. Noting a speech by Mrs. Gandhi 
which made reference, in vague terms, to the need for an Indian 
development model which, ''could 'reach out to the poorest in the 
land,' " Norman D. Palmer, a political scientist with long experience 
in South Asia noted that — 

Such a model has not yet emerged, either during the more than a quarter century 
of democratic government, or during the few months of emergency rule. This raises 
questions and suggests goals much more basic than the preservation of any 
particular kind of political system.^ 

Other observers have focused less on the need for equality in Indian 
society or for radical social change under government leadership, than 
on the importance of freeing the economy from the oppressive weight 
of centralized planning and bureaucracy, especially complex tax, 
licensing currency, and import control requirements. In defense of 
this view, which is widely held by U.S. Government officials, pro- 
ponents cite the much more impressive achievements of India's private 
sector and small-scale enterprises in contributing to economic growth, 
as contrasted with the relatively poor performance of the public sector 
industries. A corollary to this thesis is that unhindered growth will of 
itself produce a social revolution and greater equality in India, just as 
it did in the Western capitalist countries. 

A related view is that of John W. Mellor, a Cornell University 
professor of agricultural economics and of Asian studies, and former 
Chief Economist of the Agency for International Development, who 
argues for a ' 'rural-led, employment-oriented strategy for economic 
growth." Mellor sees ''increased agricultural production, based on 
cost-decreasing technological change," as a way to "make large net 
additions to national income and place that income in the hands of the 
cultivator classes, who tend to spend a substantial proportion of it on 
nonagricultural commodities.^ He argues that raising incomes in rural 

» Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations, vol. I. New York: The Twen- 
tieth Century Fund, 1968, p. 705. For a criticism of Myrdal see Maurice Zinkin, "South Asia's Economic 
Transformation: The Myrdal Thesis" (a review article), Pacific Affairs, vol. XLI, No. 4 (winter 1968-69), 
pp. 575-579. 

* Norman D. Palmer, "India in 1975: Democracy in Eclipse," Asian Survey, vol. XVI, No. 2. (February 
1976), p. 110. 

* John W. Mellor The New Economics of Growth: A Strategy for India and the Developing World. Ithaca: 
Cornell University Press, 1976, pp. 14, 242-269. 


areas is much more important than redistributive poUcies or radical 
social change in both generating economic growth and raising living 
standards although specialized programs to meet the health, nutrition, 
education, and family planning needs of the poorest classes are also 
necessary as a supplement to the broader growth strategy. 

So far as actual trends in the medium term are concerned there 
presently seems to be substantial agreement that all of the countries 
of South Asia have the potential to make economic progress. Fre- 
quently cited reasons for this view include the reduced likelihood of 
regional conflict, the discovery of significant new resources such as 
oil and natural gas, the recent impressive growth of India's exports 
and hard currency reserves, and some unexpected and partially 
compensatory benefits of the oil price increases, including increased 
exports of goods and labor from South Asian countries to the rich, 
but in many ways less developed OPEC countries. 

Opinions differ on the likelihood that India and other countries of 
the region will capitalize on their potential for growth. Myron Weiner, 
cited earlier, is, on the whole, pessimistic. His view is shaped by long 
study of the Indian policy and a skeptical view of the potential of 
either India's pre-1975 style democratic system, with its economically 
inefficient trade-offs and compromises, or authoritarianism as em- 
bodied in the Emergency. Economists such as John P. Lewis, John 
Mellor, and LawTence Viet express var^^ing degrees of optimism.* 


One point on which considerable consensus exists is the likelihood 
that India will remain the dominant regional power militarily and 
will continue to expand its military power.^ Although some U.S. 
officials have expressed concern over possible aggressive tendencies on 
the part of a militarily strong India, many observers in and out of 
Government are relatively unworried about the possibility of an 
expansionist or aggressive India. While it is conceded that India has 
not shrunk from the use of force when its interests seemed to dictate, 
it has thus far defined its interests in relatively narrow terms. The 
Kashmir dispute with Pakistan has been resolved in a de facto sense 
to India's advantage, and India has given no indication of attempting 
militarily to reopen the Himalayan border dispute with China. 

India has, however, given evidence that it wishes to play a much 
larger role in the Indian Ocean, and the navy has been the focus of its 
military buildu]) in recent years.^ India is developing extensive base 
facilities in its Andaman and Nicobar Islands, some 1,300 kilometers 

• Viet's optimism, however is more on India's potential than on actual performance, which remains doubt- 
ful in his view. Viet, "India's Second Revolution," pp. 354-370. 

• This view is oilher explicilly siL^^cribed to or implicit in the followinc;: Myron Weiner, "Critical Choices 
for India and America," and Rol)ort A. Scalapino, "Alternatives for the International Order in Asia," in 
Donald C. Ilellmann, Ponthern (^Lexington, Mass. lOTtl); Richard L. Parks, "Cominpto Orips with India," 
Asian Survey, vol. VII, No. 12 (December 1977), pp. lloS-lKiti; Stephen l\ Cohen and Richard L. Park 
"India: Emergent Power," oj). cit., and William J. Barnds, "United States Policy Toward South Asia: 
Shifting Perceptions and Policy Choices," Pacific Community, vol. 8, No. 4 (July 1977), pp. (MS-r^W. Numer- 
ous other articles and rei)orts have been published concerninK India's weapons programs that, in an unsys- 
tematic but cumulative way, point to continued advances in the country's military power and growing 
technological self-sulliciency. 

The latest annual rer)ort of the includes plans to acquire the British Harrier vertical/ 
short take off and landing fV/S1'()L) aircraft for India's one aircraft carrier and, it is hoped, the licensed 
production in Indiaof deep strike aircraft and .submarines. Mohan Ram, "India's Military Beefs Up Despite 
Ea;ed Tension," (Jhri.stian Science Monitor, Apr. 17, 1978, p. 9. 

• The Navy's share of capital expenditures in the defense budget rose from 7 percent in 1963-64 to nearly 
49 percent in 1973-74. Raju G. C. Thomas, "The Indian Navy in the Seventies," Pacific Affairs, vol. 48, No. 
4 (Winter 1975-76), p. 500. 


east of the Indian mainland, which are seen as havin<^ stratep^ic im- 
portance both for control of the eastern Indian Ocean and for the 
defense of India itself. The Indian Navy calls occasionally at ports 
as far west as the African mainland. The ends to which India may 
Dut her military power are not clear, but several factors are commonly 
cited as evidence that India will not behave a(z:^ressively. These include 
a pattern of firm civilian control over the military and a reluctance of 
even Mrs. Gandhi's authoritarian regime to levy the kind of taxes 
that would be necessary to support a sustained adventurist j)osture.^ 
India's neighbors, naturally, are less sanguine about her power than 
observers in more distant countries. 


Nuclear trends in the region are largely synonymous with the devel- 
opments discussed earlier regarding the proliferation of nuclear weap- 
ons capabilities. India has already demonstrated this capability and 
possesses a nuclear establishment which could become largely immune 
to external sanctions. Pakistan will soon have a much more limited, 
but still significant, capability to approach or cross the nuclear weapons 

Whether India will proceed to build nuclear weapons and acquire 
a credible deliver}^ system, cannot be foreseen. Prime Minister Desai 
has expressed firm opposition to such a course, but other impor- 
tant menbers of his coalition have previously advocated acquiring 
nuclear weapons.^ Some observers feel that the detonation of a nu- 
clear device in 1974 sufficiently satisfied India's internal and external 
objectives, and that there are limited incentives to actually pursue 
the weapons option.^ Others who have studied the evolution of India's 
nuclear program see both foreign policy and domestic political ad- 
vantages in ' 'moving toward, but not over, the nuclear weapons thresh- 
old."^^ It could be argued that the 1974 detonation brought India 
more trouble than it might have expected — for instance, the stiffer 
U.S. nonproliferation polic}^ — but it is not at all clear that India's 
policymakers see the consequences of the 1974 explosion in this light. 

Pakistan's course is even less predictable. On the one hand, its 
actual nuclear capabilities are certain to be limited in view of the 
small size of its nuclear program. Its nuclear objectives, on the other 
hand, seem clearly related to a perceived need to counter India's 
capabilities — if only by acquiring the wherewithal to produce nuclear 
weapons. Unless total and absolute mistrust of India persists, it 
is conceivable that a sufficiently untlireatening policy on the part of 
India could deflect Pakistan from the pursuit of the nuclear weapons 
option. Pakistan is also more susceptible to external pressure from 
nuclear suppliers. Pakistan probably could never match India bomb 
for bomb. 

Both countries are firmly committed to nuclear power as a long- 
term major factor in meeting their energy requirements. Due to the 
great prestige attached to nuclear technology and the secondary 

7 Cohen and Park, op. cit., p. 23. 

« For instance, External Affairs Minister Vajpayee. Bray and Moodie, "Nuclear Politics in India," op. 
cit., p. 116. Defense Minister Jagjivan Ram previously disavowed interest in India's acquiring nuclear weap- 
ons but supported the development of nuclear explosives for peaceful purposes. Gillette, "India: Into the 
Nuclear Club on Canada's Shoulders," op. cit., p. 1053. 

William Beecher, "U.S. Presses India To Renounce N-Arms," Boston Globe, Oct. 11, 1977, p. 1. 

1* Bray and Moodie, op. cit., p. 116; 


benefits of a nuclear weapons option, neither is likely to be impressed 
with arguments that nuclear power is uneconomic or otherwise un- 
suited to their requirements. 

Policy Issues for the United States and Schools of Thought 


economic issues 

Views on what the United States should do about South Asia are, 
out of considerations of practicality, more constrained than opinions 
about the prospects for the region or its trends in the medium term. 
Few observers give any credence to talk of applying the medical 
concept of ''triage" ^^ to South Asia, and it may be argued whether the 
underlying assumptions of this concept are valid for any country in the 
region. On the other hand, the sobering experience of the last two 
decades has shown the limits of outside aid, both in terms of its 
effects on the recipient countries and in terms of political support 
within the United States. 

Some development economists such as John P. Lewis and John W. 
Mellor,^^ who take an optimistic view of growth possibilities in the 
region, stress the need for a new commitment to development on the 
part of the United States. Both argue that agriculture must be the 
backbone of economic development and that the United States has a 
role to play in providing surpluses to cover bad years, agricultural 
research and technical assistance, and assistance to accelerate the 
production of fertilizer. Both see actions by the recipient countries as 
crucial, including a firm commitment to an agriculturally based, em- 
ployment oriented, growth strategy, and by implication in Mellor's 
case, receptivity to U.S. private investment. 

In a country like India with a GNP approaching $100 billion, it 
is obvious that U.S. bilateral aid programs can have limited effect. 
In fact, were it not for the food aid programs, India would not even 
be a net U.S. bilateral aid recipient, as its current repayments on past 
loans are around $160 million per year.^^ 

Currently, the issue of U.S. bilateral aid to India seems to be 
perceived by both countries as more important as evidence of im- 
proved relations than as a critical requirement for India's develop- 
ment. It is increasingly clear that India itself does not desire either a 
large bilateral aid program involving interference in policy decisions 
or the piling up of new debts to other countries. This is especially 
true now that increasing exports, multilateral agency assistance (in 
large part financed by U.S. contributions), and remittances from 
Indians abroad have greatly improved the country's hard currency 
position. Many U.S. officials have expressed the view that what India 
needs most from the United States are technology transfers in agri- 
culture and industry. Practical difficulties arise, however, over the 
issue of how such transfers are to take place in view of the past Indian 

" Using finite resources to aid only those most likely to respond and leaving the rest to their fate. 

" John W. Mellor, Cornell University, prepared statement for the Subcommittee on the Near East and 
South Asia of the Committee on Foreign Affairs, House of Representatives, Sept. 24, 1974. Mellor's views on 
development r)ossibilities are more fully stated in his book "The New Economics of Growth: A Strategy for 
India and the Developing World" (A Twentieth Century Fund Study) (Ithaca and London, 1970). 

" U.S. Congress. (Jommittee on International Relations. "Now Directions" Aid Programs in 
Asia; Indochina Refugees in Thailand; Report of a Staff Study Mission to Thailand, Bangladesh, India, and 
Pakistan, Nov. 16 to Dec. 15, 1977." (Committee Print.) Washington, U.S. Government Printing Office, 
1978, p. 51. 


selectivity about desired types of private foreign investment, re- 
strictions on the repatriation of profits, and limits on equity capital 
held by foreigners in Indian enterprises (generally limited to 40 percent 
foreign equity) . 


Views on how the United States should pursue its security interests 
in the region are more divergent than opinions on economic questions. 
Essentially, however, security issues can be reduced to the following: 
(1) The nature and size of the U.S. naval presence in the Indian 
Ocean, (2) India's role in the military balance in Asia and the Persian 
Gulf, (3) the conditions under which the United States will permit 
the transfer of arms and defense technology to the region, and (4) 
the extent of remaining U.S. military support for Pakistan. 

For some years now, the Department of Defense has expressed 
concern at the growing Soviet naval presence in the Indian Ocean 
and has attempted, in a relatively low-keyed fashion, to strengthen 
the U.S. position in the region. The principal result of this effort 
has been the buildup of the Diego Garcia facility, an increase in 
periodic deployments of task groups from the Pacific Fleet into the 
Indian Ocean, and regular patrols of the sealanes by reconnaissance 

This increased U.S. activity in the region has produced various 
reactions from littoral states: Countries more dependent on the United 
States or that feel threatened by the Soviet presence have exhibited 
greater sympathy with U.S. policy, although most countries of the 
littoral give at least lip service to the ''Zone of Peace" concept. Despite 
being a major advocate of the ''Zone of Peace" concept for the Indian 
Ocean, India has been relatively restrained in expressing its objections 
to the U.S. naval presence. Reportedly, India recently demonstrated 
a more evenhanded concern about the presence of both superpowers 
by supporting the Republic of the Maldives Government in its 
decision to reject a Soviet offer of $1 million for a long-term lease on 
the atoll of Gan, formerly a British RAF staging base.^^ Clearly, 
however, there are limits on how far the United States could go in 
the direction of a forward naval strategy in the region without seriously 
straining Indo-United States relations. 

The Carter administration seems to favor dealing with the Soviet 
naval presence in the region by negotiating an agreement with the 
U.S.S.R. to limit superpower naval deployments. Talks with the 
Soviet Union on the Indian Ocean issue were initiated in June 1977 
bv Paul C. Warnke, head of the U.S. Arms Control and Disarma- 
ment Agency. Reportedly, the U.S. and the Soviet Union had tenta- 
tivelv agreed to limit deployments to current levels and to "avoid 
'forward deployment' of forces in a fighting mode in the ocean." ^^ 
More recently, however, the whole future of the talks became clouded 
by the Soviet exclusion from Berbera, Somalia, the subsequent 
U.S.S.R. and Cuban involvement in the Ethiopian side of the con- 
flict between Ethiopia and Somalia over the Ogaden region, and con- 
tinuing Soviet and Cuban support of Ethiopia against the secessionist 
movement in Eritrea. The outlook for the talks is now very uncertain. 

" Seymour Freidin, "Superpowers Wooing Maldives," Baltimore News American, Nov. 6, 1977, p. 10. 
i» "Indian Ocean Buildup Halted by United States, Soviets," India Express, Oct. 7, 1977. For a summary 
of the reported U.S. proposals see the New York Times, Sept. 26, 1977. 


Some critics of U.S. policy have argued for a more fonvard naval 
posture in the region. Former Chief of Naval Operations, Adm. 
Elmo R. Zumwalt, Jr. (ret.), for instance, cites the Soviet naval 
presence and the importance of U.S. interests in the Persian Gulf and 
Middle East as the rationale for a naval buildup by the United States 
in the area. Zumwalt considers the announced plans for the Diego 
Garcia facility as ''a bare minimum of prudence." ^^ Robert J. Pranger 
of the American Enterprise Institute also argues for a forward, 
resource-oriented naval strategy in Asia. Pranger recommends the 
deploATiient of roving task forces consisting of nuclear-powered 
aircraft carriers and "associated amphibious elements" that ''should 
be on constant patrol in areas where armed intervention with de- 
finitive American power would secure access to vital resources and 
waterways, should these be closed by the force of any power." In 
addition, Pranger proposes the deployment of lesser naval forces 
''operating out of bases and homeports" that would patrol the sealanes 
connecting the United States and "resource rich areas." Pranger notes 
that "these forces should have base support in the Indian Ocean and 
in Western and South Pacific." ^^ 

Reportedly, the Department of Defense has issued planning 
guidance to the services to meet possible military threats to the Persian 
Gulf oilfields. The implications, if any, for U.S. naval posture in the 
Indian Ocean or for the naval and air facility at Diego Garcia are not 

In general, South Asian specialists in the academic and development 
communities tend to take a dim view of a U.S. Indian Ocean buildup, 
though there are a few prominent Asian experts who place more stress 
on strategic considerations than political issues. Myron Weiner, for 
instance, considers it foolhardy to pursue a forward military strategy 
which would make an enemy of India. In Weiner 's view, even an 
authoritarian India will likel}^ contain divergent interest groups, in- 
cluding grou])s which value a connection with the United States. This 
situation will prevent India from taking a radical course unless pro- 
voked unnecessarily. Weiner sees other countries in the area, including 
Iran, as much more susceptible to destabilizing events such as palace 
coups, revolutions, or simpl}" the death of a dominant leader. In that 
sense their long-term alinements or policies are less predictable. Weiner 
urges, therefore, that U.S. polic^Tnakers resist the understandable 
tendency to think primarily in terms of strategic interests in South 
Asia and to focus instead on development issues.^ ^ 

It seems clear that there has been, especially since the March 1977 
elections, a decided shift by India away from an}^ "special relationship" 
with the Soviet Union and toward more harmonious relations with the 
United States. This development would seem to be unquestionably in 
the interest of the United vStates and its friends in the Persian Gulf. 
Iran, for its part, has actively sought to involve India in a new regional 
miUtary and economic grouping. ^^ 

>• Adm. E. R. Zumwalt, Jr., "A New Base in the Indian Ocean?" (with a contrary view by Adm. G. R. 
La Rocque fret.). Baltimore Sun, July, 11 1975. 

" Robert J. Pranger "The Evolving Role of Asia in American Policy," in Southeast Asia: "The Politics 
of Poverty and Peace, " op. cit., p. 225. 

" George C. Wilson, "New U.S. Military Plan: European, Persian Focus," Washington Post, Jan. 27, 
1978. p. 1. 

»» Weiner, op. cit., pp. 76-77. 

*« Iran's objec-tives in this regard were .^stressed during a Febniary 1078 visit of the Shah of Iran to India; 
"Deeper Iiido-Iranian Ties Visualized; Shananshah OlTers Iranian Oil Credit To Finance Indian Projects"; 
Indian and Foreign Review, vol. 15, Feb. 15, 1978, pp. 5-6; Mohan Ram, "Shah of Iran Looks to India With 
Naval, Economic Aims," Christian Science Monitor, Feb. 7, 1978, p. 4. 


Tlie (liminiition of Soviet influence also works in CMiirui's favor, and 
it has been suggested that one of the most constructive things the 
United vStates could do would be to encourage India and China in 
their efforts at a reapprochement, while bearing in mind India's con- 
tinuing need for good relations with the U.vS.S.R.^'^ Some degree of U.S. 
encouragement of India's growing self-confidence and its lessened reli- 
ance on the U.S.S.R. would seem likely to reinforce the favorable shift 
in India's policy. Another observer, William J. Barnds, however, has 
stressed that the United States has little to gain from actively support- 
ing India's regional dominance, as the change in American policy would 
likely be regarded as temj)orary by India and would impel India's 
neighbors to seek unwanted accommodations with the U.S.S.R.^^ 

Another security issue is that of transfers of arms and defense 
technology. The Department of Defense has generally recognized 
that India's efforts to achieve military self-sufficiency are aimed at 
ending any dependency on Soviet military aid. Officials also note 
India's desire to obtain more militar}^ technology from the West — in 
many areas the Soviets have little more to offer than India can obtain 
through its own scientific resources. These would seem to be favorable 
developments of considerable significance. Still, there is great concern 
about transferring military technology due to the total lack of Ameri- 
can access to Indian defense facilities and the consequent inability to 
monitor the use of sophisticated technology. 

While arms sales to Pakistan have been limited in recent years, the 
United States has sold relatively sophisticated defensive weapons 
such as wireguided (TOW) antitank weapons. In Pakistan's case, the 
arms sale issue is inseparably meshed with the question of the coun- 
try's security problems. Pakistan is still, via CENTO, part of the 
Western alliance system. Thus one relevant issue is whether Pakistan 
should again be eligible to participate in the foreign militar}^ sales 
credit program. Obviously, the current political situation militates 
against the formulation of any longer term policy toward selling arms 
to Pakistan. 

The question of possible arms sales to South Asia cannot be isolated 
from United States objectives to restrain arms transfers generall}^, 
especially transfers to the Third World. While the United States has 
exercised restraint in the region for more than 10 years, the recent 
cancellation of the A-7 aircraft sale to Pakistan stands as one of the few 
concrete indicators of a general change in U.S. arms transfer policy. 
The record of the past few years suggests a preference, in the Depart- 
ment of State and the White House, at least, for an intraregional politi- 
cal solution to the securit}^ concerns of India and Pakistan. This policy 
seems to be based on the reality that aims transfers to either India or 
Pakistan will be resented by the other, and by a general disinclination 
to contribute to military competition in the region. Inevitably, due to 
Pakistan's smaller economic, industrial and technological base, this 
policy discomforts Pakistan more than India, with respect to India the 
issue of transfers of technology that could have defense applications 
is probably a more relevant issue than sales of weapons or military 

21 Richard L. Park, "Coming to Grips With India," Asian Survey, vol. XVIT, No. 12 (December 1977), 
p. 1163. In a recent address to the United Nations. China's Foreign Minister omitted the customary criti- 
cisms of India and its relationship with the Soviet Union; and during a March 1978 meeting between Prime 
Minister Desai and a Chinese friendship delegation in New Delhi, the Chinese delegation leader spoke of 
everlasting brotherhood between the countries. U.S. Foreign Broadcast Information Services, PRC, Mar. 
16, 1978, p. A-13. 

22 Barnds, " United States Policy Toward South Asia," op. cit., p. 654. 


Other arms options that may be open to Pakistan include the 
acquisition of modem weapons from other Western countries, probably 
with financing by Pakistan's gulf neighbors, and the not inconceivable 
option of obtaining weapons from the U.S.S.R. The U.S.S.R. has 
shown repeatedly that is is not adverse to supplying arms to local 
rivals. Moreover, the decreasing Indian dependence on Soviet military 
and economic support, and the current strong Chinese influence in 
Pakistan, may seem to the Soviets to offer a promising field for maneu- 
ver. This latter prospect is one of the dangers for the United States in 
either unilateral arms restraint in the region or a decision to transfer 
arms or military technology to India. 

Many observers see positive signs in Pakistan's close ties with the 
other Islamic countries of Southwest Asia. These ties may be especially 
useful as Indian economic relations grow with the same states. Due to 
the importance of its economic ties with the Gulf states, India may 
acquire an even greater interest in assuaging Pakistan's sense of in- 
security than would be suggested by purely bilateral considerations. 


In light of the broad consensus in the United States that the ex- 
pansion of unsafeguarded or insuflGiciently safeguarded nuclear tech- 
nology in nonnuclear weapons states is dangerous to world peace, the 
nuclear issues between the United States and South Asian countries 
will likely be the most important issues in this region. Because of wide 
support in the United States for stricter nonproliferation safeguards, 
the less ardent attitude of other nuclear suppliers (whose domestic 
energy and export programs will be greatly affected by new U.S. re- 
quirements) , and the firm commitment of India and Pakistan to develop 
nuclear energy, the nuclear issue seems to present the most difficult 
and important choices for the United States. 

The simple fact is that the United States cannot hope to attain its 
nonproliferation goals without the cooperation of India, Pakistan, and 
the Western European countries. Except for a general agreement on 
the part of the major nuclear powers to adopt more rigorous safeguards 
on their technology exports, there has been a notable absence of sup- 
port for the more ambitious U.S. objectives to defer the development 
of breeder reactors and the use of plutonium as a fuel. The enactment 
of the Nuclear Non-Proliferation Act of 1978 has generated resentment 
and ill will on the part of most of the other nuclear suppliers, as well 
as among aspiring nuclear powers such as India and Brazil. ^^ 

At present, India's terms for acquiescing in the new U.S. nonpro- 
liferation safeguards may be unrealizable. The Indian terms, as 
stated by Prime Minister Desai, include an agreement by the super- 
powers to limit their nuclear arsenals and specific steps toward re- 
ducing their stocks of nuclear weapons, as well as the signing of a 
comprehensive nuclear test ban agreement. These actions, the Indian 
Government maintains, are necessary to create a ''nondiscriminatory 
regime" governing the control of nuclear energy. ^'^ While the United 

23 For a dPtailod discussion of tho current nuclear safoRtiards issue, incliidinR the role of India in precipitat- 
ing the U.S. drive for stricter non[»roliferation slandards and the attitudes of the other nuclear suppliers 
see Karl Kaiser, "The Great Nuclear l)(!hate," ForeiRu I'ohcy, No. ao (Si)ring 1978), pp. 83-110. 

2< K. now a|)i)ears that India has Riven up its earlier requirement that China and France— who have not 
par1,iciF)a1ed in the current (lenevalalks on a comprehensive test ban treaty— participate in the aKreements 
to limit inulear weapons and ban mulear tests. Simon Winchester, "Callaghan, Dcsai Reach Agreement 
in Nuclear Talks," London Guardian, Jan. 10, 1978. 



43 3 1262 04947 8745 

States has generally subscribed to these objectives itself, it is question- 
ab e whether they will be realized in time to prevent a serious strain on 
Indo-United States nuclear cooperation, if not its termination. 

Despite its strong nationalistic opposition to full-scope safeguards 
there are several factors that could lead India to reach an acc^omm oda- 
tion with the United States on future nuclear coo])eration, though 
not, perhaps, without a legacy of resentment. At present, India's 
three operating power reactors are under at least partial lAEC 
safeguards, and the additional reactors that will come on stream in 
the next few years, including Canadian-type units of largely indigenous 
construction at the Madras Atomic Power Station, will be under safe- 
guards to the extent that they operate with foreign-supplied nuclear 
materials such as heavy water or with materials derived from the 
operation of the reactor with foreign-supplied fuel or heavy water. ^* 
Currently, the main unsafeguarded facilities are a fuel fabrication 
plant, a reprocessing plant, and three research reactors. 

Due to financial stringencies and technical problems currently being 
encountered in its atomic program, India has a strong incentive to 
seek continued foreign cooperation. India's indigenous heavy-water 
plants are all behind schedule and all have been struck by accidents of 
some type, including a December 1977 explosion at the Baroda plant. 
A shortage of heavy water could delay the startup of four indige- 
nously built power reactors.^^ So far as fuel for the U.S. -built Tarapur 
reactors is concerned, the use of alternative fuels such as a plutonium- 
uranium oxide mixture would be costly and may likely present 
technical difficulties. Thus, while it is possible that India will ulti- 
mately achieve complete self-sufficiency, strong incentives now exist 
for maintaining foreign cooperation. No foreign supplier wdll provide 
nuclear materials without safeguards, although no supplier other than 
the United States has demanded full-scope safeguards as a condition 
of nuclear cooperation. 

In April 1978 Congress became directly involved in the issue of 
continuing nuclear cooperation between the United States and India. 
This was a result of a 2-2 split on the Nuclear Regulatory Commission 
(a fifth position being vacant) on the application for a license to export 
17,000 pounds of uranium fuel for the Tarapur power station. The two 
Commissioners opposed to the export reportedly argued that due to 
India's announced opposition to full-scope safeguards it was not possi- 
ble to make certain statutory determinations required by the new law 
regarding the continuance of safeguards on the U.S. fuel. This view 
held that India's current opposition to full-scope safeguards implied 
an eventual termination of Indo-United States cooperation, thereby 
endangering existing safeguards on the Tarapur facility. The Commis- 
sioners favoring the export, on the other hand, suggested that this 
reasoning went beyond the requirements of the law and infringed upon 
the President's prerogatives in the conduct of foreign policy.^^ 

Section 126(b)(2) of the Nuclear Non-Proliferation Act of 1978 
(Public Law 95-242) provided a remedy in cases where the Nuclear 
Regulatory Commission failed to issue a proposed license on a timely 

2« Reportedly, when the Soviet Union agreed, in 1976, to supply heavy water following the termination of 
Canadian cooperation it required India to accept lAEC safeguards on any reactor using the heavy water 
and on all nuclear materials resulting from the operation of the facility. "Russia Forced India to Sign Pact," 
India Express, June 30, 1978, p. 1. 

»9 "N-Power Plants Face Heavy Water Scarcity," India Express, June 30, 1978, p. 1. 

»' Thomas O'Toole, "NRC, on a Tie Vote, Rejects Export of Uranium for India," Washington Post, 
Apr. 21, 1978; Warren H. Donnelly, "Nuclear Exports: Licensing Fuel for India's Tarapur Nuclear Power- 
plant," CRS Issue Brief IB78043. 


basis or could not make the required statutory determinations required 
under the act. The President may, by Executive order, authorize the 
export, provided he determines that its denial 'Svould be seriously 
prejudicial to the achievement of U.S. nonproliferation objectives, or 
would otherwise jeopardize the common defense and security." Such 
action, however, is subject to congressional review and may be over- 
turned within a period of 60 days of continuous session by concurrent 

In his April 27, 1978, message to the Congress announcing his 
decision to allow the export, President Carter expressed his conviction 
''that denial of this export would seriously undermine our efforts to 
persuade India to accept full-scope safeguards, and would seriously 
prejudice the achievement of other U.S. nonproliferation goals." He 
expressed the ''highest confidence" that India would honor "its com- 
mitments to use exports only at the Tarapur Atomic Power Station 
and not for any explosive or military purpose." ^^ The President's 
prestige was involved in the issue, as he had promised the release of 
the reactor fuel shipment during his January 1978 visit to New Delhi. ^^ 

On May 23, and June 8, 1978, the House International Relations 
Committee held hearings on proposed House Concurrent Resolutions 
599 and 601, disapproving the export of low-enriched uranium to 
India. The Senate Foreign Relations Committee held a hearing on 
the proposed export on May 24. Essentially, testimony for and against 
the export revolved around the issue of whether the proliferation 
risks involved in the current proposed shipment of uranium out- 
weighed the foreign policy and proliferation risks inherent in a cutoff 
of uranium shipments prior to the expiration of the 18-month "grace" 
period allowed by law for the renegotiation of the existing nuclear 
cooperation agreement. 

Action by the House International Relations Committee in reporting 
unfavorably on House Concurrent Resolution 599 on June 14, approval 
of the export by the Senate Foreign Relations Committee on June 20, 
and the failure of the House (by 181 yeas to 227 nays) to agree to the 
resolution on July 12, 1978, had the effect of clearing the way for 
the uranium shipment to India. ^^ The fate of future shipments remains 
uncertain however. The pending appointment of a fifth Commissioner 
t-o the NRC would tend to reduce the likelihood of a split decision on 
uranium exports, but the resultant balance of opinion on the Com- 
mission remains to be tested. Also, the expressed views of members of 
both congressional committees suggests that while foreign policy con- 
siderations were probably uppermost in this particular case, it cannot 
be assumed that Congress will continue to sup})ort nuclear exports to 
India in the absence of progress toward Indian acceptance of full- 
sco])e safeguards.^^ 

» U.S. I'resident. Export of Special Nuclear Material to India; Message from the President of the United 
States transmittinj? his Executive order and justification for authorizing the export of low-enriched uranium 
to India for in the fueling of its Tarapur Atomic I'ower Station, pursuant to sec. r26b.(2) of the Atomic 
Energy Act of l'J54, as amended m Stat. 131). Apr. 27, iy78. Washington, U.S. Government Printing OlRce, 
lyTH (y5th Uong., 2d soss.. House. Dtx^ument 95-327.) 

» "Atom Fuel for India Approved," Baltimore Sun, Jan. 3, 1978, p. 1. 

M Thomas O'Toole, "House Panel Vote N'irtuallv Assures A-Fuel for India," Washington Post, June 15, 
1978; Donnelly, CRS Lssue Brief IH 78043. 

»' In a letter to President ("arlcr of June 21, 1978, the chairman of the Senate Committee on Foreign 
Relations, Senator John Spark man, connimnicated the view of the committee that witiiout the acliievement 
of full-scope .safeguards "it is higlily unlikely t hat a waiver allowing continued exports would be acceptable." 
Congressional Record, June 23. 1978, p. S9G81.